Emerson Electric Co. (NYSE:EMR)

Price to Earnings (P/E) Ratio Trend

The price to earnings ratio exhibited volatility over the six-year period. It decreased sharply from 20.73 in 2014 to a low of 12.08 in 2015, indicating a significant decline in market valuation relative to earnings. Subsequently, the ratio rebounded to 21.61 in 2016 and continued to rise, peaking at 25.48 in 2017. After this peak, it declined steadily to 19.46 in 2018 and marginally to 19.3 in 2019. This pattern suggests fluctuating investor sentiment and earnings performance, with a notable peak in 2017 followed by stabilization at moderately high levels.

Price to Operating Profit (P/OP) Ratio Trend

The price to operating profit ratio mirrored a similar fluctuating trend. It dropped significantly from 12.56 in 2014 to 7.56 in 2015, indicating a reduced premium on operating profit. Thereafter, it nearly doubled in 2016 to 14.11 and continued to climb, albeit more moderately, reaching 15.47 in 2017. From 2017 to 2019, the ratio slightly decreased, standing at 14.68 by 2019. Overall, the data shows an initial contraction followed by a recovery and stabilization near peak levels, reflecting changes in market valuation relative to operating profitability.

Price to Sales (P/S) Ratio Trend

The price to sales ratio demonstrated a clear upward trend from 2014 through 2017. Starting at 1.81 in 2014, it declined modestly to 1.47 in 2015, then increased sharply to 2.43 in 2016, and reached 2.53 in 2017. From 2017 onward, the ratio plateaued and slightly declined, standing at 2.46 in 2018 and 2.42 in 2019. This suggests increasing market valuation relative to sales during the earlier years, followed by a period of relative stability.

Price to Book Value (P/BV) Ratio Trend

The price to book value ratio showed a generally increasing trend across the analyzed period. Beginning at 4.4 in 2014, it experienced a moderate decline to 4.05 in 2015 before rising consistently each year, reaching 4.67 in 2016 and 4.79 in 2018. By 2019, the ratio had increased more substantially to 5.41, indicating an increasing market valuation relative to the company's book value and potentially reflecting growing investor confidence in the company's net asset value.

Share Price

The share price exhibited a fluctuating yet generally upward trend over the six-year period. Starting at $64.15 in 2014, it declined to a low of $50.01 in 2015, before gradually increasing each subsequent year to reach $73.07 by 2019. This represents an overall increase of approximately 14% from the initial value in 2014.

Earnings Per Share (EPS)

Earnings per share showed variability throughout the period. EPS rose from $3.10 in 2014 to a peak of $4.14 in 2015, followed by a notable decline to $2.54 in 2016 and a further decrease to $2.37 in 2017. After 2017, EPS recovered, increasing to $3.52 in 2018 and $3.79 in 2019. Despite the dip in the middle years, EPS in 2019 remained slightly above the initial 2014 figure.

Price-to-Earnings (P/E) Ratio

The P/E ratio demonstrated considerable volatility during the period. It decreased sharply from 20.73 in 2014 to 12.08 in 2015, indicating that the share price decline in 2015 outpaced the drop in earnings or that earnings increased significantly relative to price. In 2016 and 2017, the P/E ratio rose to 21.61 and 25.48 respectively, reflecting a possible revaluation of the stock price relative to earnings. This ratio then declined to 19.46 in 2018 and remained relatively stable at 19.3 in 2019, suggesting a normalization of market expectations or income relative to share price.

Overall Analysis

The company's share price experienced an initial decline followed by a recovery, while earnings per share showed an initial increase, subsequent mid-period decline, and later rebound. The fluctuating P/E ratio highlights changing investor sentiment or market valuation norms over the period. Specifically, the initial drop in share price in 2015, despite strong earnings growth, led to a lower P/E ratio. The subsequent increases in the ratio in 2016 and 2017 suggest increased market optimism or revaluation. By 2019, the metrics indicate a stabilized valuation environment with moderate growth in earnings and share price.

The analysis of the financial data over the period from September 30, 2014, to September 30, 2019, reveals several notable trends in the company's market valuation and operational performance.

Share Price

The share price experienced a decline from $64.15 in 2014 to its lowest point of $50.01 in 2015. After this decrease, the share price showed a steady recovery and growth trend, rising to $73.07 by 2019. This indicates an overall positive market sentiment and investor confidence over the latter part of the period.

Operating Profit Per Share

The operating profit per share increased significantly from $5.11 in 2014 to $6.62 in 2015. However, in 2016 and 2017, it declined sharply to $3.90 and remained flat at that level for two years. From 2017 onwards, the operating profit per share showed a gradual recovery, reaching $4.98 in 2019, although it did not return to the peak levels observed in 2015.

Price-to-Operating Profit Ratio (P/OP)

The P/OP ratio decreased markedly from 12.56 in 2014 to 7.56 in 2015, reflecting the temporary increase in operating profit per share. Following that, the ratio increased significantly, peaking at 15.47 in 2017. Afterward, it slightly declined but remained relatively stable around 15 in 2018 and 14.68 in 2019. This pattern suggests that the market valuation relative to operating profit was high during the latter years despite the operating profit per share not reaching previous highs.

In summary, the share price's recovery trend contrasts with the operating profit per share's initial volatility and partial rebound. The elevated P/OP ratio in the later years implies that investors were willing to pay a premium relative to operating profit, possibly reflecting expectations of future growth or confidence in other aspects of the company's performance.

Share Price Trend

The share price exhibited an overall upward trajectory over the observed period. Beginning at $64.15 in 2014, it decreased to $50.01 in 2015, indicating a temporary downturn. However, from 2015 onwards, the share price gradually increased each year, reaching $73.07 by 2019. This reflects a recovery and growth phase following the initial decline.

Sales per Share Trend

Sales per share showed a declining pattern initially, dropping from $35.37 in 2014 to a low of $22.59 in 2016. After this low point, there was a consistent increase over the subsequent years, rising to $30.16 in 2019. Although sales per share did not return to the 2014 peak level, the upward movement post-2016 suggests improving revenue generation effectiveness per share.

Price-to-Sales (P/S) Ratio

The P/S ratio experienced a decrease from 1.81 in 2014 to 1.47 in 2015, aligning with the decline seen in share price and sales per share during the same period. Thereafter, the P/S ratio increased sharply to 2.43 in 2016 and remained relatively stable around 2.4 to 2.5 through 2019. This stability indicates that market valuation relative to sales strengthened significantly after 2015 and maintained a higher level, even as sales per share were still recovering.

Summary of Relationships

The initial decline in share price and sales per share in 2015 corresponds with the reduction in market valuation as evidenced by the P/S ratio drop. The following years show a recovery phase with increasing share prices and sales per share. The P/S ratio stabilized at a higher level from 2016 onward, suggesting a more favorable market sentiment and possibly improved profitability or growth expectations despite sales per share being lower than initial levels. Overall, the trends indicate a period of challenge around 2015 followed by a recovery and enhanced investor confidence.

Share Price

The share price experienced a declining trend from 2014 to 2015, dropping from $64.15 to $50.01. However, it rebounded in the subsequent years, showing consistent growth each year from 2015 through 2019, ultimately reaching $73.07. This indicates renewed investor confidence or improved market perceptions over this period.

Book Value Per Share (BVPS)

The book value per share showed a generally decreasing trend from 2014 to 2016, declining from $14.59 to $11.77. It recovered in 2017 and 2018, reaching a peak of $14.29, but then slightly declined again in 2019 to $13.52. This pattern suggests some fluctuations in the company's net asset value per share, with a moderate recovery before a minor decline at the end of the period.

Price-to-Book Value Ratio (P/BV)

The P/BV ratio decreased from 4.4 in 2014 to 4.05 in 2015, aligning with the decline in share price. It then increased from 4.05 in 2015 to 5.41 in 2019, indicating that the market price of the share elevated at a faster rate than the book value per share. This rising P/BV ratio suggests growing investor expectations or premium valuation compared to the company's net book value.