EMERSON ELECTRIC (EMR)·Q1 2026 Earnings Summary

Emerson Raises Guidance as Orders Surge 9%, Extends EPS Beat Streak

February 3, 2026 · by Fintool AI Agent

Emerson Electric delivered a solid Q1 FY2026, reporting adjusted EPS of $1.46 (up 6% YoY) on sales of $4.3 billion (up 4% YoY). The industrial automation leader extended its EPS beat streak to nine consecutive quarters while raising full-year guidance, sending shares up 2.3% to $152.10 on the day.

The standout metric was underlying orders growth of 9%, driven by robust longer-cycle project bookings in Power and LNG. Management raised the midpoint of FY2026 adjusted EPS guidance to $6.40-$6.55, signaling confidence in continued operational momentum despite ongoing weakness in Europe and China.

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Did Emerson Beat Earnings?

Yes — Emerson beat on EPS while revenue came in slightly below consensus.

This marks 9 consecutive quarters of EPS beats for Emerson. The slight revenue miss was attributed to lower available software renewals, which impacted underlying growth by 3 percentage points in Software & Systems.

EPS Beat History

*Values retrieved from S&P Global

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What Did Management Guide?

Emerson raised the midpoint of FY2026 adjusted EPS guidance.

FY2026 Full Year Guidance

Q2 FY2026 Outlook

Q2 will face a ~$65M headwind from lower available software renewals, impacting Software & Systems growth. Excluding this dynamic, underlying sales growth would be 3%-4%.

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What Changed From Last Quarter?

Positive Developments

1. Orders acceleration: Underlying orders grew 9% (vs. low-single-digits in prior quarters), driven by longer-cycle project bookings in Power and LNG

2. Backlog expansion: Ending backlog of $7.9B, up 9% YoY, with ~$6B from growth verticals

3. Test & Measurement surge: The segment delivered 11% underlying growth, with AI-powered Nigel platform winning product awards

4. ACV momentum: Annual Contract Value reached $1.6B, up 9% YoY, with 10%+ growth expected for the full year

Headwinds Persisting

1. Software renewal timing: Lower available renewals created a 70bps margin headwind and 3pts underlying sales headwind in Software & Systems

2. Europe and China weakness: Both regions remain soft, offsetting strength in North America, India, and Middle East & Africa

3. Free cash flow timing: Q1 FCF of $602M was down from $694M YoY due to higher interest expense and working capital timing

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How Did Segments Perform?

Growth Verticals Momentum

Management highlighted sustained momentum in key growth verticals:

• Power: Robust project bookings, benefiting from grid modernization
• LNG: Strong longer-cycle orders
• Life Sciences: Collaboration with Roche on DeltaV platform
• Semiconductor: Benefiting from fab investments
• Aerospace & Defense: Continued strength

Growth verticals now represent ~$1B of Q1 net sales, up 14% YoY, with ~80% of Q1 project wins coming from these areas.

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How Did the Stock React?

EMR shares rose 2.3% on February 3, 2026, closing at $152.10 — near the 52-week high of $154.04.

The positive reaction reflects:

1. Ninth consecutive EPS beat
2. Raised FY2026 EPS guidance midpoint
3. Strong orders momentum (+9%)
4. Backlog visibility ($7.9B)

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Key Technology and Innovation Updates

Emerson highlighted several technology milestones:

• Industrial IoT Company of the Year: Named 2026 Industrial IoT Company of the Year
• DeltaV v16 Release: Advanced enterprise operations platform with software-defined automation vision
• Roche Collaboration: DeltaV partnership to accelerate Life Sciences innovation
• Nigel AI: Released new automated workflow capabilities, moving toward autonomous test

The Nigel AI platform was named to Electronic Product Design & Test's 2025 Product of the Year list.

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Capital Allocation Update

Emerson reiterated its shareholder return commitments:

Through FY2028, management targets $12B in cumulative free cash flow with $10B returned to shareholders.

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Q&A Highlights: What Analysts Asked

North America Strength (+18% Orders)

CFO Mike Baughman broke down the +18% North America orders growth: "Power and LNG from a project perspective, T&M was up 20% in orders, close to 30% in North America. The elements of LNG, power, semiconductors, aerospace, defense, life sciences, augmented with a strong MRO, which was up mid- to high-single-digit from an orders perspective, drove the strength."

Management expects high single-digit North America orders growth to continue for the full year.

Ovation/Power Momentum (+74% Orders)

CEO Lal Karsanbhai highlighted the Ovation business: "Orders were up 74%, driven by large project wins, including behind-the-meter data centers and fleet modernizations for major utility customers."

Emerson won automation content for a new 1.7-gigawatt AI data center in the United States, leveraging proven behind-the-meter power generation management software.

Tariff Update

Management addressed the tariff environment: "We built in about $130 million of tariffs into the plan. We are seeing relief to that number, but it's early to quantify how much. But it will be a net positive for the year versus what we've baked into the plan."

China Outlook Turned More Bearish

Karsanbhai noted a more cautious China view: "Our outlook on China has turned a little more bearish as we navigated another quarter. We now believe that we'll be down low single digits for the year based on lackluster activity in particularly the chemical sector."

Green shoots exist in test & measurement and power generation, but chemical and automotive weakness persists.

Venezuela Opportunity

On potential Venezuela market access, Karsanbhai said: "We have a long-established history in Venezuela and a relationship with PDVSA that goes back for decades. We estimate to have approximately $1 billion of installed base in the country."

Emerson is preparing contingency plans similar to Iraq post-Gulf War but noted significant hurdles remain including talent drain, security, and regulatory changes.

DRAM/Memory Chip Exposure

COO Ram Krishnan addressed DRAM concerns: "We buy about $8 million of DRAMs that impact many product lines, but mostly in control systems and software and T&M... Most of our buy is really Gen 3 and Gen 4, DDR3 and DDR4, where, yes, supply chains have extended. We don't have a lot of exposure in Gen 5 DDRs, which is really the AI-driven constraints."

Margin impact from price inflation is manageable; availability is the key watch item.

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What to Watch Going Forward

1. Software renewal timing: Q2 faces ~$65M headwind; watch for recovery in H2

2. Europe and China: Both regions remain weak; any improvement would be upside

3. Project backlog conversion: $7.9B backlog should support H2 revenue acceleration

4. Growth vertical momentum: Power, LNG, Life Sciences, Semiconductor driving 14% YoY growth

5. 2028 targets: On track toward $8.00 Adjusted EPS and 30% Adj. Segment EBITA margin

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Q1 FY2026 Summary

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Analysis based on Emerson Electric's Q1 FY2026 earnings presentation published February 3, 2026.

Related:

• EMR Company Profile
• EMR Earnings Transcripts