Emerson Electric Co. (NYSE:EMR)

Customer relationships

The value of customer relationships showed significant fluctuation over the observed periods. Initially, there was a decline from 1594 million USD in 2014 to 580 million USD in 2016. This was followed by a strong recovery, increasing steadily to 1973 million USD by 2019, surpassing the initial value.

Intellectual property

Intellectual property values remained relatively stable from 2014 to 2015, around 1050 million USD, but decreased notably in 2016 to 730 million USD. Subsequently, there was a consistent upward trend, reaching 1565 million USD by 2019, indicating renewed investment or valuation increases in this asset category.

Capitalized software

Capitalized software values demonstrated a gentle declining trend from 1190 million USD in 2014 to 1071 million USD in 2016. After 2016, there was a gradual increase year over year, reaching 1334 million USD by 2019, suggesting ongoing development or accumulation of software assets.

Identifiable intangible assets, gross carrying amount

The gross carrying amount of identifiable intangible assets experienced significant volatility. It declined sharply from 3836 million USD in 2014 to 2381 million USD in 2016, then reversed to increase substantially to 4872 million USD by 2019. This indicates periods of impairment or disposals followed by acquisitions or revaluations.

Accumulated amortization

Accumulated amortization consistently increased in absolute value (became more negative) from -2147 million USD in 2014 to -2257 million USD in 2019, with some intermittent decline in amortization intensity in 2016 and 2017. This trend aligns with the growth in intangible assets, reflecting ongoing amortization expense over time.

Identifiable intangible assets, net carrying amount

The net carrying amount of identifiable intangible assets followed a U-shaped pattern, starting at 1689 million USD in 2014, dropping significantly to 902 million USD in 2016, then rising sharply to peak at 2751 million USD in 2018 before a small decline to 2615 million USD in 2019. This suggests recoveries from impairments or new intangible asset recognition offsets against amortization.

Goodwill

Goodwill values decreased from 7182 million USD in 2014 to a low of 3909 million USD in 2016, indicating possible impairments, divestitures, or reclassifications. From 2016 onward, goodwill increased steadily to 6536 million USD by 2019, reflecting acquisitions or upward revaluations.

Goodwill and other intangibles

The combined value of goodwill and other intangibles exhibited a pronounced decline from 8871 million USD in 2014 to 4811 million USD in 2016, followed by a robust recovery reaching 9206 million USD in 2018. A slight decrease to 9151 million USD was then observed in 2019. This pattern mirrors the individual trends observed in goodwill and identifiable intangibles, confirming significant asset fluctuation driven by impairments and acquisitions during the period under review.

Analysis of the financial data reveals several notable trends and shifts over the six-year period from 2014 to 2019.

Total Assets

Reported total assets show a general decline from US$24,177 million in 2014 to US$20,497 million in 2019, indicating a reduction in asset base by approximately 15%. The largest decrease occurs between 2016 and 2017. Adjusted total assets, which likely exclude goodwill or intangible assets, exhibit more pronounced volatility, starting at US$16,995 million in 2014, dropping to US$15,435 million in 2015, then rising to a peak of US$17,834 million in 2016 before sharply decreasing again to US$13,961 million in 2019.

Common Stockholders’ Equity

The reported common stockholders’ equity declines markedly from US$10,119 million in 2014 to US$8,233 million in 2019, with the lowest point observed in 2016 at US$7,568 million, followed by a moderate recovery in 2017 and 2018 before another drop in 2019. The adjusted common stockholders’ equity, which is somewhat lower, evidences a steep decrease from US$2,937 million in 2014 to only US$1,697 million in 2019. The adjusted equity also fluctuates noticeably, with a low point in 2015 and some recovery in 2016 and 2017 before further declines.

Net Earnings Attributable to Common Stockholders

Reported net earnings display variability through the report period, starting at US$2,147 million in 2014, increasing to a peak of US$2,710 million in 2015, then falling significantly in 2016 and 2017 to approximately US$1,518-$1,635 million, followed by a rebound to US$2,203 million in 2018 and a slight increase to US$2,306 million in 2019. Adjusted net earnings align closely with reported net earnings, suggesting minimal reconciliation differences or goodwill effects in net income figures across years.

Overall, the data indicates a downward trend in both assets and equity when adjusted for goodwill, implying that a significant portion of the reported asset and equity bases might be attributable to goodwill or intangible assets. The fluctuations in adjusted figures highlight possible asset write-downs or restructuring activities during the period. Earnings demonstrate some volatility, particularly with a decline mid-period and recovery thereafter, reflecting possible operational challenges or changing economic conditions. The alignment of adjusted and reported net earnings suggests integrity in earnings reporting despite asset and equity adjustments.

The analysis of the financial data over the six-year period reveals several noteworthy trends in profitability, efficiency, leverage, and returns.

Net Profit Margin

The reported net profit margin fluctuated moderately, starting at 8.75% in 2014 and peaking at 12.66% in 2018 before slightly decreasing to 12.55% in 2019. The adjusted net profit margin closely mirrors the reported figures, indicating that goodwill adjustments did not significantly affect this profitability metric.

Total Asset Turnover

The reported total asset turnover ratio exhibited a declining trend between 2014 and 2016, dropping from 1.01 to 0.67, followed by a gradual recovery to 0.9 by 2019. In contrast, the adjusted total asset turnover started notably higher at 1.44 in 2014, fell sharply to 0.81 in 2016, and then improved steadily to 1.32 by 2019. This suggests that adjustments for goodwill impact the assessment of asset efficiency, showing stronger turnover ratios overall but maintaining the same general trend of initial decline and subsequent recovery.

Financial Leverage

Reported financial leverage increased from 2.39 in 2014 to a peak of 2.87 in 2016, then declined to 2.25 in 2017 before slightly rising again to 2.49 in 2019. Adjusted financial leverage shows more pronounced volatility, with a peak at 10.81 in 2015, followed by significant reductions and then a sharp increase to 8.23 in 2019. This wide variation after goodwill adjustment indicates that intangible assets significantly influence the leverage ratios, reflecting changes in the capital structure or asset base valuation over time.

Return on Equity (ROE)

The reported ROE experienced considerable variation, starting at 21.22% in 2014, reaching 33.54% in 2015, then declining to 17.41% in 2017 before rebounding to 28.01% in 2019. The adjusted ROE values are substantially higher and more volatile, exceeding 90% in several years and peaking near 190% in 2015, which suggests that after excluding goodwill impacts, the return on shareholder equity is assessed to be significantly greater but with high volatility.

Return on Assets (ROA)

The reported ROA shows a decline from 8.88% in 2014 to 7.52% in 2016, then gradually improved to 11.25% by 2019. Adjusted ROA is consistently higher than reported ROA, ranging from 15.62% in 2014 to 16.52% in 2019, with a slight dip in 2016. The adjustment for goodwill thus enhances the perceived efficiency in asset utilization over the observed period.

Overall, the data indicates that adjustments for goodwill notably affect the interpretation of financial leverage, asset turnover, and return on equity, often increasing their magnitude and volatility. Meanwhile, net profit margin is relatively stable across reported and adjusted figures. The trends point to improving efficiency and profitability in the latter years, despite some fluctuations in leverage and asset utilization metrics.

The financial data indicates fluctuations in both reported and adjusted net earnings attributable to common stockholders over the six-year period ending September 30, 2019. Initially, there is an increase from 2147 million US dollars in 2014 to a peak of 2710 million US dollars in 2015. This is followed by a notable decline in 2016 and 2017, reaching 1635 million and 1518 million US dollars respectively. Subsequently, net earnings recover, rising to 2203 million in 2018 and further to 2306 million in 2019.

Adjusted net earnings closely mirror the reported figures except in 2014, where adjusted earnings exceed the reported value by a significant margin (2655 million versus 2147 million US dollars). For all other years, reported and adjusted net earnings are identical, suggesting that goodwill adjustments had a material impact on earnings primarily in the earliest year of the dataset.

Regarding profitability as measured by net profit margin, a similar trend is evident. Reported net profit margin increases markedly from 8.75% in 2014 to 12.15% in 2015, then declines to 11.26% in 2016 and further to 9.94% in 2017. The margin improves again in the last two years, achieving 12.66% in 2018 and slightly decreasing to 12.55% in 2019. Adjusted net profit margins follow an identical pattern, reinforcing that adjustments for goodwill had no effect on margin calculations beyond the initial year examined.

Overall, the data reveals a cyclical pattern with a peak in profitability and earnings in 2015, followed by a downturn through 2017, and a moderate recovery from 2018 onwards. The alignment between reported and adjusted figures in most years indicates limited ongoing influence of goodwill in the company's earnings performance, except in 2014 where adjustments improved reported profitability metrics. The volatility observed suggests sensitivity to external or internal factors affecting profitability during the mid-period years, with an encouraging stabilization trend toward the end of the timeframe.

Total Assets

Reported total assets decreased from US$24,177 million in 2014 to US$20,497 million in 2019, showing a general downward trend with the most significant decline occurring between 2015 and 2017. Adjusted total assets similarly trended downwards, declining from US$16,995 million in 2014 to US$13,961 million in 2019, with a notable reduction between 2016 and 2018.

Total Asset Turnover

The reported total asset turnover remained stable at 1.01 in 2014 and 2015 before declining sharply to 0.67 in 2016. Thereafter, it showed a gradual recovery, increasing to 0.90 by 2019 but not returning to initial levels. Adjusted total asset turnover started higher at 1.44 in 2014 and 1.45 in 2015, sharply dropping to 0.81 in 2016. The ratio then improved steadily, reaching 1.32 in 2019, suggesting improved efficiency in asset utilization after 2016, but still slightly lower compared to the starting period.

Insights

The data reveals a general reduction in asset base over the observed period, both in reported and goodwill adjusted terms, indicating possible asset disposals or impairments. Concurrently, asset turnover ratios dipped markedly in 2016, reflecting reduced efficiency in asset use or decreased sales relative to asset levels at that time. Subsequently, the improvements in total asset turnover ratios, particularly in adjusted terms, suggest better operational efficiency and asset management in the later years. However, despite these improvements, total asset turnover has not fully returned to the early period levels, implying ongoing challenges in maximizing asset productivity.

The financial data displays notable contrasts and trends between reported and goodwill adjusted figures over the six-year period.

Total Assets

Reported total assets demonstrate a general declining trend from 24,177 million USD in 2014 to 20,497 million USD in 2019. Conversely, adjusted total assets, which exclude goodwill, also decline but with more fluctuation, decreasing from 16,995 million USD in 2014 to 13,961 million USD in 2019, reaching a low point at 13,935 million USD in 2018.

Common Stockholders’ Equity

Reported common stockholders' equity shows a decreasing trend from 10,119 million USD in 2014 to 8,233 million USD in 2019, with a temporary rise in 2017 and 2018. Adjusted equity, however, is significantly lower and exhibits high volatility, starting from 2,937 million USD in 2014, dropping sharply to 1,428 million USD in 2015, rising again in 2016 to 3,659 million USD, but then decreasing consistently to reach 1,697 million USD in 2019. This suggests that goodwill adjustments materially impact equity valuations and introduce considerable variability.

Financial Leverage

Reported financial leverage ratios fluctuate moderately, increasing from 2.39 in 2014 to a peak of 2.87 in 2016, before declining to 2.25 in 2017, and then gradually rising again to 2.49 in 2019. In contrast, adjusted financial leverage ratios exhibit much greater volatility and higher overall levels, starting at 5.79 in 2014, peaking sharply at 10.81 in 2015, then decreasing to a low of 4.20 in 2017, followed by increases to 5.59 and then 8.23 in 2018 and 2019 respectively. The higher adjusted leverage ratios indicate a significantly greater reliance on debt once goodwill is excluded, reflecting increased financial risk.

Overall, the analysis reveals that goodwill has a substantial impact on the reported financial metrics, masking the underlying volatility and leverage risk evident in the adjusted data. The downward trend in adjusted equity and assets alongside elevated adjusted financial leverage suggests challenges in asset quality and capital structure stability when excluding intangible assets such as goodwill.

The analysis of the annual financial data reveals several noteworthy trends in the company's earnings, equity, and return on equity (ROE) over the six-year period examined.

Net Earnings Common Stockholders

The reported net earnings show variability, with an initial increase from 2147 million USD in 2014 to a peak of 2710 million USD in 2015, followed by a significant decline to 1635 million USD in 2016 and a further drop to 1518 million USD in 2017. Subsequently, earnings recover in 2018 and 2019, reaching 2203 and 2306 million USD, respectively. The adjusted net earnings mirror the reported figures closely, except in 2014 where the adjusted earnings are higher than the reported number, which suggests an adjustment impacting that year's figures.

Common Stockholders’ Equity

The reported common stockholders' equity exhibits a general downward trend with fluctuation. It starts at 10119 million USD in 2014, then declines sharply to 8081 million USD in 2015 and continues decreasing to 7568 million USD in 2016. A brief recovery is seen in 2017 and 2018, with values rising to 8718 and 8947 million USD, respectively, followed by another downturn to 8233 million USD in 2019. In contrast, the adjusted common stockholders' equity figures are substantially lower across all years, indicating significant deductions, possibly related to goodwill or intangible assets. The adjusted values decrease markedly from 2937 million USD in 2014 to 1697 million USD by 2019, showing a consistent decline which suggests a reduction in tangible equity over time.

Return on Equity (ROE)

Reported ROE fluctuates notably but remains within a moderate range. It peaks at 33.54% in 2015, drops to around 17-21% during 2016-2017, and recovers again to reach 28.01% in 2019. This variability indicates changes in profitability relative to shareholder equity. The adjusted ROE, however, displays much higher and more volatile values, ranging from 44.62% to nearly 190%, peaking significantly in 2015 at 189.78% and again rising sharply in 2019 to 135.89%. The elevated levels of adjusted ROE compared to reported ROE reflect the impact of lower adjusted equity values, which amplify the returns computed on a reduced equity base.

Overall, the data suggest fluctuating profitability and equity levels, with adjustments based on goodwill or intangible assets significantly affecting the perception of equity size and return measures. The company’s core earnings demonstrate resilience with recovery after declines, while the equity adjustments point to ongoing changes in the asset composition affecting financial metrics.

The financial data presents a mix of reported and goodwill adjusted figures, revealing distinct trends in earnings, assets, and return on assets (ROA) over the six-year period ending in 2019.

Net Earnings Common Stockholders

The reported net earnings show variability, with a peak in 2015 at 2,710 million US dollars, followed by a decline in 2016 and 2017, reaching a low of 1,518 million. Earnings then recovered in 2018 and 2019, reaching 2,306 million. Adjusted net earnings mirror this trend closely except for 2014, where the adjusted figure at 2,655 million exceeds the reported by a significant margin, indicating adjustments that increased recognized earnings for that year.

Total Assets

Reported total assets exhibit a downward trajectory from 24,177 million in 2014 to 20,497 million in 2019, with a steady decrease except for a slight rebound in 2018. Adjusted total assets, which likely exclude goodwill, follow a similar declining pattern but at considerably lower absolute values, dropping from 16,995 million in 2014 to approximately 13,961 million in 2019. The adjustments create a notable gap between reported and adjusted asset bases, reflecting substantial goodwill recorded on the balance sheets.

Return on Assets (ROA)

Reported ROA percentages indicate initial improvement from 8.88% in 2014 to a peak of 12.27% in 2015, followed by a decline to about 7.52% in 2016 and stability around 7.75% in 2017. From 2017 onward, ROA improves notably, reaching 11.25% by 2019. Adjusted ROA figures, calculated on the exclusion of goodwill, consistently show higher returns, starting at 15.62% in 2014, peaking at 17.56% in 2015, dipping in 2016 and 2017, and then rising again to 16.52% in 2019. This suggests a stronger asset utilization when goodwill is excluded.

Overall, the data reveals a cycle of earnings fluctuation with a strong recovery by the end of the period, coupled with a steady decline in asset base, particularly once adjusted for goodwill. The adjusted ROA consistently outperforms the reported ROA, emphasizing the impact of goodwill on asset efficiency metrics. The trends suggest improving profitability on a leaner, more tangible asset base toward the later years.