Emerson's buyback jump puts its cash forecast to the test
The automation company plans much larger share repurchases, with an early push. Almost all its expected annual free cash flow already has a destination.
Emerson plans to return about $3.8 billion to shareholders in fiscal 2027, nearly matching the free cash flow it expects to generate. A sharp increase in share repurchases would drive the larger returns.
The automation company plans about $2.5 billion of buybacks and $1.3 billion of dividends. Its free-cash-flow forecast is $3.8 billion to $3.9 billion, after capital spending.
Most of the forecast cash has a destination
Research by Ticker Byline shows that the planned returns would leave about $100 million at the upper end of that year's free-cash-flow forecast after buybacks and dividends.
| Use or source of cash | Company forecast |
|---|---|
| Share repurchases | About 2.5 |
| Dividends | About 1.3 |
| Combined shareholder returns | About 3.8 |
| Free cash flow | 3.8 to 3.9 |
Emerson expects about $1.5 billion of the buybacks in its first fiscal quarter, placing much of the planned activity early in the year. It bought $1 billion of stock during fiscal 2026.
Free cash flow is operating cash flow less capital expenditures. Emerson expects $4.3 billion to $4.4 billion of operating cash flow and about $500 million of capital spending in fiscal 2027.
A higher plan after a modest cash shortfall
Fiscal 2026 free cash flow rose to $3.535 billion, but finished below the approximately $3.6 billion Emerson forecast in August. The new plan calls for more cash generation and substantially larger repurchases.
The operating business ended the year with stronger sales and earnings. Underlying sales, which exclude currency and significant acquisitions or disposals, increased 7% in the final quarter and 4% for the year.
Emerson also raised its quarterly dividend by 7% to $0.595 a share.
The Emerson company profile tracks the earnings, cash and debt behind the plan. Its year-end cash balance was $1.806 billion, before the planned first-quarter repurchases.