Emerson Electric (EMR) and Hubbell (NYSE:HUBB) Critical Survey

Emerson Electric (NYSE: EMR) and Hubbell (NYSE:HUBB) are both mid-cap industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Institutional & Insider Ownership

70.1% of Emerson Electric shares are owned by institutional investors. Comparatively, 85.2% of Hubbell shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by company insiders. Comparatively, 1.3% of Hubbell shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Emerson Electric and Hubbell’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 9.94% 20.47% 9.05%
Hubbell 7.96% 19.69% 8.82%

Valuation and Earnings

This table compares Emerson Electric and Hubbell’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Emerson Electric $15.26 billion 2.58 $1.64 billion $2.35 26.22
Hubbell $3.51 billion 1.91 $293.00 million $5.18 23.67

Emerson Electric has higher revenue and earnings than Hubbell. Hubbell is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.

Dividends

Emerson Electric pays an annual dividend of $1.92 per share and has a dividend yield of 3.1%. Hubbell pays an annual dividend of $2.80 per share and has a dividend yield of 2.3%. Emerson Electric pays out 81.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hubbell pays out 54.1% of its earnings in the form of a dividend. Hubbell has raised its dividend for 60 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Emerson Electric and Hubbell, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 2 9 4 0 2.13
Hubbell 0 3 1 0 2.25

Emerson Electric presently has a consensus price target of $65.23, indicating a potential upside of 5.88%. Hubbell has a consensus price target of $122.00, indicating a potential downside of 0.49%. Given Emerson Electric’s higher possible upside, equities research analysts clearly believe Emerson Electric is more favorable than Hubbell.

Summary

Emerson Electric beats Hubbell on 10 of the 16 factors compared between the two stocks.

Emerson Electric Company Profile

Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.

Hubbell Company Profile

Hubbell Incorporated is engaged in the design, manufacture and sale of electrical and electronic products for a range of non-residential and residential construction, industrial and utility applications. The Company’s segments include Electrical and the Power. The Electrical segment consists of businesses that sell stock and custom products, including standard and special application wiring device products, rough-in electrical products, lighting fixtures and controls, components and assemblies for the natural gas distribution market, as well as other electrical equipment. In addition, certain businesses design and manufacture a range of high voltage test and measurement equipment, industrial controls and communication systems used in the non-residential and industrial markets. The Power segment consists of operations that design and manufacture various distribution, transmission, substation and telecommunications products primarily used by the electrical utility industry.

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