Emerson Electric Co. - Washburn University · Student Investment Fund Stock Report Analysts: Randy Kidder & Michael Hooper Emerson Electric Co. NYSE: EMR Recommendation: Buy Market

Student Investment Fund Stock Report Analysts: Randy Kidder & Michael Hooper

Emerson Electric Co. NYSE: EMR

Recommendation: Buy

Market Cap: $26.22B

Recent Price: $35.89 (11/28/08)

Target Price: $45.53

Sector: Conglomerate

Sub-Sector: Electronics

Highlights

• EMR is the world’s largest maker of power equipment for oil and energy companies.

• China recognizes EMR as a “world’s leading HVAC technology provider.”

• In 2008, China contracted EMR to serve China’s growing nuclear industry. EMR also opened a world-class manufacturing facility in China.

• In 2008, EMR selected to modernize coal-fired plant control systems by NTPC, Ltd., India’s largest power utility.

• In 2008, EMR secured a long-term agreement with QatarGas Operating Company Ltd., world’s largest supplier of natural gas.

• EMR will host the first in a series of regional bioenergy summits to discuss how to translate alternative fuels technology into sustainable large-scale commercial production.

Business Summary

Emerson Electric Company is a global technology company engaged in designing and supplying product technology and delivering engineering services in a range of industrial, commercial and consumer markets. EMR operates four business segments that include: Process Management, Industrial Automation, Network Power, and Appliance and Tools.

EMR’s commitment to innovation provides new products and services which help businesses modernize industrial processes, consumers increase energy efficiency and emerging markets build infrastructure.

EMR successfully continues to execute strategies to globalize assets and manage its business mix, positioning it for strong future growth.

Investment Thesis

• EMR is well positioned for economic uncertainty with a growing global presence in

a well-diversified group of B2B and B2C markets.

• EMR has a 5-year EPS growth rate of 20.9%, a current dividend yield of 3.80% and

a 52-year history of raising dividends annually.

• EMR’s strong historical valuations including a high ROIC, growing free cash flow

and EVA are forecast to continue to grow in a conservative discounted cash flow

valuation model.

• EMR is currently trading at a P/E ratio of 11.17x. The 5-year historical P/E range

is 10.90x – 26.84x

Financial Statistics vs. Selected Competitors & Industry

Profitability EMR UTX ITW Industry

Sales, 5-Yr. Growth Rate 12.19% 14.18% 11.30% 8.28%

Gross Margin, 5-Yr. Avg. 36.12% 27.33% 35.12% 24.35%

Operating Margin, 5-Yr. Avg. 13.37% 12.29% 16.66% 6.14%

Net Margin, 5-Yr. Avg. 9.11% 8.09% 11.49% 3.93%

Valuation & Performance EMR UTX ITW Industry

Price/Earnings, (TTM) 11.17x 10.03x 12.01x 4.29x

Return on Assets, (TTM) 12.05% 9.00% 11.16% 1.96%

ROIC, 2007 35.10% 33.10% 31.06%

EPS, 1-Yr. Growth Rate 17.14% 17.15% 11.04%

Dividend Yield, Current 3.80% 3.23% 3.70% 0.01%

Price Performance vs. S&P 500

Dividends

EMR

Emerson Electric

Page 2

Randy Kidder

Michael Hooper

Business Segments

Process Management (26% of FY2008 sales), provides measurement, control and diagnostic capabilities for automated industrial processes for companies in the foods, fuels, medicines and power industries.

• The long-term trend of increasing demand for energy is driving capacity expansion and facility upgrades.

• FY2007 sales: 34% US, 24% Europe, 20% Asia


Industrial Automation (19% of FY2008 sales), offers integrated manufacturing solutions to diverse industries globally.

• Infrastructure investment in emerging markets and worldwide demand for reliable primary and standby power provides ongoing growth opportunities.

• FY2007 sales: 41% US, 41% Europe,10% Asia


Network Power (25% of FY2008 sales), provides reliable power sources and environmental conditioning for telecommunication systems, data networks and critical business applications to ensure continuous operation. EMR provides industrial electric motors for a variety of industries. EMR also provides air conditioning, refrigeration, appliances and energy efficient technologies for household and commercial use.

• US data centers use $4.5 B worth of electricity – this is expected to double by 2011. The demand for network reliability is growing in emerging markets.



Climate Technologies (15% of FY2008 sales), provides products and services in all areas of residential and commercial cooling and refrigeration. This division provides digital remote monitoring and control of refrigeration units in grocery stores and other distribution sites. EMR provides refrigeration for stores, medical equipment, trucks and transport containers.

• Environmental regulations call for a 75% decrease in use of R-22 refrigerant. EMR produces the most efficient line of scroll compressors that run on the replacement refrigerant. EMR has developed heat pump compressors that expand their effective geographic use area. Significant growth is expected in the US and China.


• FY2008 sales: 55% US, 16% Europe, 18% Asia Appliance and Tools (15% of FY2008 sales), provides a broad range of services and products in motors, appliances, components and storage. Motors are used in residential and commercial settings. Storage solutions provide free standing, fixed and mobile units for home use, food service and medical uses.

• Consumer and housing sectors expected to continue below trend growth in 2009. EMR will focus on costs and asset management to create value.



Process Management

FY20 08

Sales $ 6.8B

2 6% of Total Sales

19.6% Growth

Industrial Automation

FY2008

Sales $4.9B

19% of Total Sales

19.5% Growth

Network Power

FY2008

Sales $6.3B

25% of Total Sales

26% Growth

Climate Technologies

FY2008

Sales $3.8B

15% of Total Sales

5.6% Growth

Appliance and Tools

FY2008

Sales $3.9B

15% of Total Sales

-9.3% Growth

Emerson Electric

Page 3

Randy Kidder

Michael Hooper

Global Presence

EMR conducts sales, research and development as well as manufacturing on a global basis. 165 of their 265 manufacturing facilities are located outside the United States, mostly in Europe, but they also have a significant, and growing, presence in Asia. International growth is strategic to EMR’s success. Their international focus is on infrastructure. EMR divides its international business into five regions.

Asia/Pacific (FY2008: $4.5B in sales, 17% of total sales, 17% growth). EMR conducts significant manufacturing, R&D, and marketing activities in India, China, Thailand and the Philippines.

Europe/Eastern Europe and Russia (FY2008: $5.7B in sales, 22% of total sales, 5% growth). Eastern Europe offers great opportunity for growth. Emerson has major customers in Poland, Hungary, Russia, Turkey, Azerbaijan, and Kazakhstan.

Latin America (FY2008: $1.2B in sales, 5% of total sales,

18% growth). EMR conducts business in Argentina, Brazil, Columbia, Mexico and Venezuela.

Middle East/Africa (FY2008: $1.2B in sales, 5% of total sales, 17% growth). Major customers in this region are in the oil and gas industry.

North America (FY2008: $12.2B in sales, 46% of sales, 3% growth). The majority of EMR’s sales occur in North America but growth is stagnant.

Macroeconomic Assumptions

Growth rates in emerging markets, such as China and India, will slow but will remain relatively high compared to the United States and Europe. As of November 2008, China’s projected growth for 2009 is 8.3%. China must maintain a growth rate of 8% to keep pace with the number of new entrants in the job market. China recently introduced a $586 billion stimulus package primarily targeted on building infrastructure. India’s projected growth rate is 6.0% for 2009. India plans a $500 billion infrastructure investment. Investment in electrical infrastructure leads their list. India needs a 10-fold increase in electrical production capacity to meet the average growth in demand of 8%.

Industrialization and a rapidly growing middle class in developing countries and emerging markets increases competition for energy and will lead to an eventual return of high prices. This will lead to increases in the need for additional supplies of traditional energy sources such as oil, gas and electric. There will also be a demand for innovative, energy-efficient industrial solutions and consumer products.

A growing middle class increases the demand for a reliable primary and backup power supply as businesses grow and consumers purchase additional technology for home use. This also leads to an increased demand for telecommunication and with it new construction and improvements in infrastructure.

Innovation as a Strategy

Between 2004 and 2007, EMR introduced 577 new products, a 118% increase over the previous three years. In 2007, EMR received 670 patents worldwide and spent $874 million – 3.8% of sales – on new and existing product development.

US & Canada

Sales for FY2008

$12.2B

3% Growth

Western Europe

Sales for FY2008

$4.8B

5% Growth

Eastern Europe/Russia

Sales for FY2008

$0.9B

5% Growth

Latin America

Sales for FY2008

$1.2B

18% Growth

Middle East/Africa

Sales for FY2008

$1.2B

17% Growth

Asia/Pacific

Sales for FY2008

$4.5B

17% Growth

FY2008

International Sales: 54% of Total Sales

Emerging Market Sales: 30% of Total Sales

International Sales Growth: 10%

Emerson Electric

Page 4

Randy Kidder

Michael Hooper

Economic Value Added & Market Value Added (millions)

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2007

2008E

2009E

2010

E20

11E201

2E201

3E201

4E201

5E20

16E20

17E

Eco

no

mic

Val

ue

Ad

de

d

$25,000

$27,000

$29,000

$31,000

$33,000

$35,000

$37,000

$39,000

Ma

rke

t V

alu

e A

dd

ed

Economic Value Added Market Value Added

Valuation

A discounted cash flow (DCF) model suggests that EMR is currently undervalued. The model returns a fair value of $45.53 for 2008 and supports a 12-month target price of $48.64. EMR’s closing price on Nov. 28 2008 was $35.89.

Revenue growth is modeled on a year-by-year basis to better reflect EMR’s growth prospects. Revenue is projected to grow at 11.0% in 2008, 8% in 2009, 10 % in 2010-2013 and then tapers off to a long-term sustainable rate of 4% in 2018 and beyond. EMR’s historical 5-YR growth rate avg. is 12.8%.

COGS/Sales is modeled slightly higher than the historical average, which is trending lower. Although EMR is reducing costs through better capacity utilization, an improved global supply chain, greater efficiencies, and improved cost controls these savings are offset by rising raw materials and energy costs.

SG&A costs are adjusted down 1.5% from the historical average. EMR has a historical trend of declining SG&A costs. Our forecast continues that trend while allowing for growth in actual dollar costs.

Tax Rate is modeled at 32% to compensate for an unusually low 2003 tax rate, which coincidently matches EMR’s forecasted tax rate for 2009.

Share Growth/Diluted Share Growth is set at 0%. EMR has historically bought back shares, as represented in the historical average of -1.4%. A 0% rate ensures that EPS and intrinsic value per share are modeled conservatively.

Cash, Inventory, Acts Payable, Net PPE and Notes Payable are each increased above their historical averages. This helps dampen an already historically high ROIC (20.4% to 35.1%). The model also increases Net PPE steadily on a year-by-year basis, 15.3% in 2008 to 19% for 2015-2017. In addition to more conservatively forecasting ROIC, it provides for a smoother free cash flow throughout the forecast period.

WACC and Beta. The model uses a WACC at 10.26%. We use a beta of 1.21 based on a risk-free rate of 4% and market risk premium of 6%. Our regression calculation yielded a beta of 1.06 at the end of October 2008. On November 26, 2008, a casual survey of financial websites found beta calculations ranging from .86 to 1.24.

Long-term Horizon Value Growth. A 4% long-term horizon value growth rate is conservative considering EMR’s investment in new product development and their brand strength in a number of industries.

Model Outputs

Margins. The forecast model projects no growth in margins over the 10-year forecast period. This helps to compensate for some of the current economic uncertainty. Historically, EMR’s margins are improving based on volume leverage, favorable business mixes, cost control measures. For FY2008, Operating Margin was up 17%.

ROA is modeled to average 8.73% over the forecast period. This is slightly higher than EMR’s historical average for ROA, which was 8.60% from 2003-2007 and models a trend for a growing ROA.

ROE is conservatively modeled to be at lower than historical levels. ROE gradually declines from 21.3% to 15.4% over the forecast period.

ROIC remains at high levels in the DCF model although inputs, primarily Net PPE, are adjusted to moderate and taper ROIC. High ROIC is justified based on strong free cash flow, investment in R&D and strong brands, positioning EMR as a market leader in several business segments. EMR is also able to compete on price and quality, creating a barrier to entry.

EVA and MVA. Even with conservative forecast assumptions, EVA is projected to grow from $1,573M in 2008 to $3,033M in 2017. MVA is expected to grow from $26,579M to $37,971M over the forecast period. EMR has significant potential to continue their trend of creating value for shareholders.

Per Share Valuation. The DCF model returns a per share intrinsic value of $45.53 for 2008 and $48.64 in 2009. EMR’s stock has traded in the low to mid $30 range during the last 12 months – over this period the stock price has ranged from $30.15 to $59.05.

Free Cash Flow. The trend in historical free cash flow growth is very strong. Our model predicts strong free cash flow generation for the forecast period even with conservative modeling assumptions.

Free Cash Flow & Forecasted Share Price

$0

$1,000

$2,000

$3,000

$4,000

$5,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Fre

e C

ash

Flo

w (

in m

illi

on

s)

$0.00$10.00

$20.00$30.00

$40.00$50.00

$60.00$70.00

$80.00$90.00

Fo

reca

ste

d S

ha

re V

alu

e

Free Cash Flow Forecasted Share Value

Emerson Electric

Page 5

Randy Kidder

Michael Hooper

Multiples-Based Valuation

DCF projections of fair market value were compared to prices

based on past key multiples to help evaluate our model. Our

comparison yielded higher fair price forecasts for all multiple

computations with the exception of 2008. In 2008, the

Price/FCF multiple yielded a lower fair value price due to the

DCF model’s significant drop in projected free cash flow.

Risks

• Changes in Global GDP growth rates that differ significant from forecasted rates may affect anticipated levels of government and business investment as well as consumer spending.

• A global recession deeper and longer than anticipated may reduce the demand for consumer products, industrial investment in process improvement and investment in infrastructure.

• Retrenchment from globalization and free trade may limit EMR’s ability to grow international sales and engage in manufacturing and related research and development.

• Reduction in levels of investment in infrastructure in countries in which EMR has a strong presence may adversely affect Emerson’s international strategy of supporting infrastructure development.

• Sustained low prices or further decline in energy prices may reduce incentive for investment in additional production, building of new facilities, and the desire of companies to improve efficiencies in their processes.

• Decline in global demand for telecommunications may affect investment in infrastructure and innovative solutions.

• Fluctuations in foreign currency exchange rates may have an adverse affect on financial results.

Profitability

EMR has steadily improved gross, operating and net profit

margins despite increasing competition and rising commodity

prices. Increased sales volume has helped to leverage fixed

operating costs. EMR has worked to reduce fixed costs in

favor of variable costs, when possible, and has restructured its

portfolio of products and businesses when needed to improve

profitability. An emphasis on building its global footprint,

ongoing investment in new technology initiatives, emphasis on

new products as well as building technology and engineering

capacity in “best cost regions” has strengthened margins. EMR

is able to compete on price and quality, protecting margins.

Relative Valuation

EMR’s valuation ratios suggest that EMR’s investors are willing

to pay a premium for EMR as compared to its industry. In regards

to the selected competitors, EMR is priced at a slight premium

over UTX and ITW, with the exception of the P/E ratio. EMR

compares favorably to UTX, already in the Student Investment

Fund. EMR has a weak positive correlation with UTX, meaning it

would provide further risk-reduction benefits.

Multiples-based

Per Share Price 2008E 2009E 2010E 2011E

Price /Sales $55.00 $59.40 $65.34 $71.88

Price/EBITDA $60.96 $65.84 $72.42 $79.66

Price/FCF $34.83 $58.66 $54.36 $65.29

Enterprise Value/ EBITDA $67.29 $72.67 $79.94 $87.93

Price/Earnings $57.15 $62.06 $68.29 $75.35

DCF Price $45.53 $48.64 $51.74 $55.03

Profitability EMR UTX ITW Industry

Sales, (TTM) vs. TTM 1yr. ago 12.11% 11.48% 13.09% 3.32%

Gross Margin, (TTM) 36.84% 27.61% 35.39% 13.30%

Operating Margin, (TTM) 14.48% 12.93% 15.76% 3.47%

Net Margin, (TTM) 9.89% 8.43% 10.83% 1.99%

Relative Valuation EMR UTX ITW Industry

Price /Sales (TTM) 1.07 0.77 1.04 1.01

Price/Book (MRQ) 2.94 2.15 1.88 1.34

Price/Free Cash Flow (TTM) 16.26 12.08 7.31 46.82

Price/Earnings (TTM) 11.17 10.03 13.19 4.29

EPS Growth (TTM) 17.41 17.15 11.04 N/A

Emerson Electric

Page 6

Randy Kidder

Michael Hooper

Other Valuation Measures

Graham and Dodd

EMR is below the BASELINE in the 6th Decile of relative

valuation. Investors are paying a lower premium for future

earnings than 60 % of the investors in the S & P 500.

Piotroski's Financial Fitness Evaluator

EMR exceptionally scored the maximum of 11 in this

evaluator. The Financial Fitness Evaluator measures the firm

against benchmarks in profitability, management of

operations, assets, debt and equity, and generation of free cash

flow.

Other Analyst’s Recommendations

The mean recommendation has held steady at 2.2 for at least

the past two weeks indicating a buy, but not a strong buy,

signal from analysts. EMR rates a “Buy” from Standpoint,

Longbow, and Deutsche Securities and “Outperform” from

Robert W. Baird, and Credit Suisse.

Institutional Ownership

Institutional investors own 75% of EMR’s shares.

Insider Trading

Between March 2004 and June 2006 Net Insider Trades

displayed a selling trend. Since June of 2006, Insider’s Net

Positions have held steady and increased slightly, showing

confidence in the company in spite of anticipated difficult

economic conditions.

Net Insider Purchases (Sales) , $, in thousands

($20,000)

($15,000)

($10,000)

($5,000)

$0

Dec-0

3M

ar-0

4Ju

n-04

Sep-0

4Dec-

04M

ar-0

5Ju

n-05

Sep-

05Dec-

05M

ar-0

6Ju

n-06

Sep-

06Dec

-06

Mar-0

7Ju

n-07

Sep-0

7Dec

-07

Mar

-08

Jun-

08Se

p-08

Ne

t In

sid

er

Tra

nsa

ctio

ns

Net Insider Transactions, $, in thousands

Short Selling in EMR’s Stock

The trend is one of a shrinking volume of short trades which

exhibits growing confidence in the future performance of

EMR despite an uncertain economic environment.

Recommendation

EMR earns a “Buy” recommendation based on:

o EMR’s proven ability to execute its global growth strategy o DCF 2008 price per share intrinsic value of $45.53 and the current undervalued market price, trading in the low to

mid $30 price range o A sustainable ROIC> WACC o Current high dividend yield and EMR’s 52-year history of increasing dividends o Strong projected growth in EPS, Free Cash Flow, EVA and MVA

EMR.xls Valuation and Analysis Model, Page 1 of 8

123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

A B C D E F G H I J K L M N

Enter Firm Ticker EMR

Enter first financial statement year in cell B6 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Average ManualTotal revenue 13,958 15,615 17,305 20,133 22,572 Revenue Growth 11.9% 10.8% 16.3% 12.1% 12.8%

Cost of goods sold 9,060 10,049 11,122 12,965 14,461 COGS % of Sales 64.9% 64.4% 64.3% 64.4% 64.1% 64.4% 64.5%Gross profit 4,898 5,566 6,183 7,168 8,111

SG&A expense 2,935 3,281 3,595 4,099 4,593 SG&A % of Sales 21.0% 21.0% 20.8% 20.4% 20.3% 20.7% 19.2%Research & Development 0 0 0 0 0 R&D % of Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Depreciation/Amortization 17 21 28 47 63 D&A % of Sales 0.1% 0.1% 0.2% 0.2% 0.3% 0.2%Interest expense (income), operating 231 210 209 207 228 Inc. Exp. Oper. 1.7% 1.3% 1.2% 1.0% 1.0% 1.2%Non-recurring expenses 195 132 110 84 83 Exp. Non-rec 1.4% 0.8% 0.6% 0.4% 0.4% 0.7%Other operating expenses 106 70 92 47 37 Other exp. 0.8% 0.4% 0.5% 0.2% 0.2% 0.4%

Operating Income 1,414 1,852 2,149 2,684 3,107Interest income (expense), non-operating 0 0 0 0 0 Int. inc. non-oper. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Gain (loss) on sale of assets 0 0 0 0 0 Gain (loss) asset sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Other income, net 0 0 0 0 0 Other income, net 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Income before tax 1,414 1,852 2,149 2,684 3,107Income tax 401 595 727 839 971 Tax rate 28.3% 32.1% 33.8% 31.3% 31.3% 31.4% 32.0%

Income after tax 1,013 1,257 1,422 1,845 2,136Minority interest 0 0 0 0 0 Minority interest 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Equity in affiliates 0 0 0 0 0 Equity in affiliates 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%U.S. GAAP adjustment 0 0 0 0 0 U.S. GAAP adjust. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Net income before extraordinary items 1,013 1,257 1,422 1,845 2,136Extraordinary items, total 76 0 0 0 0 Extrordinary items

Net income 937 1,257 1,422 1,845 2,136Total adjustments to net income 0 0 0 0 0 Adjustments to NIBasic weighted average shares 838 839 830 817 794 Share growth 0.0% -1.0% -1.6% -2.8% -1.4% 0.0%Basic EPS excluding extraordinary items 1.21 1.50 1.71 2.26 2.69Basic EPS including extraordinary items 1.12 1.50 1.71 2.26 2.69Diluted weighted average shares 842 844 838 825 804 Diluted share growth 0.3% -0.8% -1.6% -2.5% -1.1% 0.0%Diluted EPS excluding extraordinary items 1.20 1.49 1.70 2.24 2.66Diluted EPS including extraordinary items 1.11 1.49 1.70 2.24 2.66Dividends per share -- common stock 0.79 0.80 0.84 0.89 1.05Gross dividends -- common stock 661 675 694 730 837 Dividend growth 2.1% 2.8% 5.2% 14.7% 6.1%Retained earnings 276 582 728 1,115 1,299

Data Source: Thomson/Reuters

Too unpredictable to forecast

Too unpredictable to forecast

Forecasting PercentagesHistorical Income Statementsvalues in millions


123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

O P Q R S T U V W X Y Z

Year-by-year revenue growth 11.00% 8.00% 10.00% 10.00% 10.00% 10.00% 9.00% 7.00% 6.00% 5.00%

Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Total revenue 25,055 27,059 29,765 32,742 36,016 39,618 43,183 46,206 48,978 51,427

Cost of goods sold 16,160 17,453 19,199 21,118 23,230 25,553 27,853 29,803 31,591 33,171Gross profit 8,894 9,606 10,567 11,623 12,786 14,064 15,330 16,403 17,387 18,257

SG&A expense 4,811 5,195 5,715 6,286 6,915 7,607 8,291 8,872 9,404 9,874Research & Development 0 0 0 0 0 0 0 0 0 0Depreciation/Amortization 47 50 55 61 67 74 80 86 91 96Interest expense (income), operating 313 338 372 409 450 495 539 577 612 642Non-recurring expenses 184 198 218 240 264 290 316 339 359 377Other operating expenses 107 116 127 140 154 169 185 197 209 220

Operating Income 3,434 3,708 4,079 4,487 4,936 5,429 5,918 6,332 6,712 7,048Interest income (expense), non-operating (293) (298) (326) (346) (358) (366) (360) (319) (255) (168)Gain (loss) on sale of assets 0 0 0 0 0 0 0 0 0 0Other income, net 0 0 0 0 0 0 0 0 0 0

Income before tax 3,141 3,411 3,753 4,142 4,578 5,064 5,559 6,014 6,458 6,880Income tax 1,005 1,091 1,201 1,325 1,465 1,620 1,779 1,924 2,067 2,202

Income after tax 2,136 2,319 2,552 2,816 3,113 3,443 3,780 4,089 4,391 4,679Minority interest 0 0 0 0 0 0 0 0 0 0Equity in affiliates 0 0 0 0 0 0 0 0 0 0U.S. GAAP adjustment 0 0 0 0 0 0 0 0 0 0

Net income before extraordinary items 2,136 2,319 2,552 2,816 3,113 3,443 3,780 4,089 4,391 4,679Extraordinary items, total 0 0 0 0 0 0 0 0 0 0

Net income 2,136 2,319 2,552 2,816 3,113 3,443 3,780 4,089 4,391 4,679Total adjustments to net income 0 0 0 0 0 0 0 0 0 0Basic weighted average shares 794 794 794 794 794 794 794 794 794 794Basic EPS excluding extraordinary items 2.69 2.92 3.22 3.55 3.92 4.34 4.76 5.15 5.53 5.89Basic EPS including extraordinary items 2.69 2.92 3.22 3.55 3.92 4.34 4.76 5.15 5.53 5.89Diluted weighted average shares 804 804 804 804 804 804 804 804 804 804Diluted EPS excluding extraordinary items 2.66 2.89 3.17 3.50 3.87 4.28 4.70 5.09 5.46 5.82Diluted EPS including extraordinary items 2.66 2.89 3.17 3.50 3.87 4.28 4.70 5.09 5.46 5.82Dividends per share -- common stock 1.12 1.19 1.26 1.34 1.42 1.50 1.59 1.69 1.79 1.90Gross dividends -- common stock 888 942 999 1,060 1,124 1,193 1,265 1,342 1,424 1,510Retained earnings 1,248 1,378 1,553 1,756 1,989 2,251 2,515 2,747 2,968 3,168

Forecasted Income Statements -- 10 Years


123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

AA AB AC AD AE AF AG AH AI AJ AK AL AM AN

Enter Firm Ticker EMR

year 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Average ManualAssets

Cash & equivalents 696 1,346 1,233 810 1,008 Cash % of Sales 5.0% 8.6% 7.1% 4.0% 4.5% 5.8% 6.0%Short term investments 0 0 0 0 0 ST Invest. % of Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Receivables, total 2,650 2,932 3,256 3,716 4,260 Receivables % Sales 19.0% 18.8% 18.8% 18.5% 18.9% 18.8%Inventory, total 1,558 1,705 1,813 2,222 2,227 Inventory % of Sales 11.2% 10.9% 10.5% 11.0% 9.9% 10.7% 11.0%Prepaid expenses 0 0 0 0 0 Pre. Exp. % of Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Other current assets, total 596 433 535 582 570 Other CA % of Sales 4.3% 2.8% 3.1% 2.9% 2.5% 3.1%

Total Current Assets 5,500 6,416 6,837 7,330 8,065Property, plant and equipment (net) 2,962 2,937 3,003 3,220 3,431 Net PPE % of Sales 21.2% 18.8% 17.4% 16.0% 15.2% 17.7%Goodwill 4,942 5,259 5,479 6,013 6,412 Goodwill % of Sales 35.4% 33.7% 31.7% 29.9% 28.4% 31.8%Intangibles 251 353 467 633 715 Intangibles % of Sales 1.8% 2.3% 2.7% 3.1% 3.2% 2.6%Long term investments 475 347 364 280 203 LT Invest. % of Sales 3.4% 2.2% 2.1% 1.4% 0.9% 2.0%Notes receivable -- long term 0 0 0 0 0 Notes Rec. % of Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Other long term assets, total 1,064 1,049 1,077 1,196 854 Other LT ass. % Sales 7.6% 6.7% 6.2% 5.9% 3.8% 6.1%Other assets, total 0 0 0 0 0 Other assets % Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total assets 15,194 16,361 17,227 18,672 19,680Liabilities and Shareholders' Equity

Accounts payable 1,397 1,629 1,841 2,305 2,501 Acts. Payable % Sales 10.0% 10.4% 10.6% 11.4% 11.1% 10.7% 11.0%Payable/accrued 0 0 0 0 0 Pay/accured % Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Accrued expenses 1,513 1,695 1,839 1,933 2,337 Accrued. Exp. % of Sales 10.8% 10.9% 10.6% 9.6% 10.4% 10.5%Notes payable/short term debt 391 902 970 898 404 Notes payable % Sales 2.8% 5.8% 5.6% 4.5% 1.8% 4.1% 6.2%Current portion of LT debt/Capital leases 0 0 0 0 0 Curr. debt % of Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Other current liabilities 116 113 281 238 304 Other curr liab % Sales 0.8% 0.7% 1.6% 1.2% 1.3% 1.1%

Total Current Liabilities 3,417 4,339 4,931 5,374 5,546Long term debt, total 3,733 3,136 3,128 3,128 3,372 LT debt % of SalesDeferred income tax 503 528 597 724 519 Def. inc. tax % Sales 3.6% 3.4% 3.4% 3.6% 2.3% 3.3%Minority interest 114 126 142 176 191 Min. Int. % of Sales 0.8% 0.8% 0.8% 0.9% 0.8% 0.8%Other liabilities, total 967 994 1,059 1,116 1,280 Other liab. % of Sales 6.9% 6.4% 6.1% 5.5% 5.7% 6.1%

Total Liabilities 8,734 9,123 9,857 10,518 10,908Preferred stock (redeemable) 0 0 0 0 0Preferred stock (unredeemable) 0 0 0 0 0Common stock 238 238 238 238 477Additonal paid-in capital 65 87 120 161 31Retained earnings (accumluated deficit) 8,889 9,471 10,199 11,314 12,536Treasury stock -- common (2,346) (2,470) (3,092) (3,865) (4,654)ESOP Debt Guarantee 0 0 0 0 0Other equity, total (386) (88) (65) 306 382

Total Shareholders' Equity 6,460 7,238 7,400 8,154 8,772Total Liabilities and Shareholders' Equity 15,194 16,361 17,257 18,672 19,680Diluted weighted average shares 842 844 838 825 804 Diluted share growth 0.3% -0.8% -1.6% -2.5% -1.1% 0.0%Total preferred shares outstanding 0 0 0 0 0 Preferred share growth

values in millionsHistorical Balance Sheets Forecasting Percentages

LT Debt is manually adjusted Afn in the pro formas

The model uses the more conservative diluted common shares number for total shares outstanding.The model uses the more conservative diluted common shares number for total shares outstanding.


123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

AO AP AQ AR AS AT AU AV AW AX AY AZ

Year by Year Property, plant and equipment 15.30% 16.20% 17.50% 18.20% 18.50% 18.70% 18.90% 19.00% 19.00% 19.00%

year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Assets

Cash & equivalents 1,503 1,624 1,786 1,965 2,161 2,377 2,591 2,772 2,939 3,086Short term investments 0 0 0 0 0 0 0 0 0 0Receivables, total 4,706 5,082 5,590 6,149 6,764 7,441 8,110 8,678 9,199 9,659Inventory, total 2,756 2,977 3,274 3,602 3,962 4,358 4,750 5,083 5,388 5,657Prepaid expenses 0 0 0 0 0 0 0 0 0 0Other current assets, total 779 842 926 1,018 1,120 1,232 1,343 1,437 1,523 1,599

Total Current Assets 9,744 10,524 11,576 12,734 14,007 15,408 16,795 17,970 19,048 20,001Property, plant and equipment (net) 3,833 4,384 5,209 5,959 6,663 7,408 8,162 8,779 9,306 9,771Goodwill 7,968 8,606 9,467 10,413 11,455 12,600 13,734 14,695 15,577 16,356Intangibles 655 707 778 856 941 1,036 1,129 1,208 1,280 1,344Long term investments 502 542 596 656 722 794 865 926 981 1,030Notes receivable -- long term 0 0 0 0 0 0 0 0 0 0Other long term assets, total 1,518 1,639 1,803 1,983 2,182 2,400 2,616 2,799 2,967 3,115Other assets, total 0 0 0 0 0 0 0 0 0 0

Total assets 24,221 26,402 29,429 32,601 35,969 39,646 43,300 46,377 49,160 51,618Liabilities and Shareholders' Equity

Accounts payable 2,756 2,977 3,274 3,602 3,962 4,358 4,750 5,083 5,388 5,657Payable/accrued 0 0 0 0 0 0 0 0 0 0Accrued expenses 2,620 2,829 3,112 3,423 3,766 4,142 4,515 4,831 5,121 5,377Notes payable/short term debt 1,553 1,678 1,845 2,030 2,233 2,456 2,677 2,865 3,037 3,188Current portion of LT debt/Capital leases 0 0 0 0 0 0 0 0 0 0Other current liabilities 286 309 340 374 411 452 493 527 559 587

Total Current Liabilities 7,215 7,792 8,571 9,429 10,371 11,409 12,435 13,306 14,104 14,809Long term debt, total 4,424 4,445 4,863 5,118 5,219 5,240 4,988 4,138 2,871 1,205Deferred income tax 818 884 972 1,069 1,176 1,294 1,410 1,509 1,600 1,680Minority interest 209 225 248 273 300 330 360 385 408 428Other liabilities, total 1,535 1,657 1,823 2,006 2,206 2,427 2,645 2,830 3,000 3,150

Total Liabilities 14,201 15,004 16,478 17,894 19,273 20,699 21,838 22,168 21,983 21,273Preferred stock (redeemable) 0 0 0 0 0 0 0 0 0 0Preferred stock (unredeemable) 0 0 0 0 0 0 0 0 0 0Common stock 477 477 477 477 477 477 477 477 477 477Additonal paid-in capital 31 31 31 31 31 31 31 31 31 31Retained earnings (accumluated deficit) 13,784 15,162 16,715 18,471 20,460 22,711 25,226 27,973 30,941 34,109Treasury stock -- common (4,654) (4,654) (4,654) (4,654) (4,654) (4,654) (4,654) (4,654) (4,654) (4,654)ESOP Debt Guarantee 0 0 0 0 0 0 0 0 0 0Other equity, total 382 382 382 382 382 382 382 382 382 382

Total Shareholders' Equity 10,020 11,398 12,951 14,707 16,696 18,947 21,462 24,209 27,177 30,345Total Liabilities and Shareholders' Equity 24,221 26,402 29,429 32,601 35,969 39,646 43,300 46,377 49,160 51,618Total common shares (diluted) 804 804 804 804 804 804 804 804 804 804Total preferred shares outstanding 0 0 0 0 0 0 0 0 0 0AFN (interactive with 3 items below) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Adjustment to LT Debt (iterate or use Goal Seek) 1,051.9 21.5 418.0 254.3 101.7 20.2 (251.8) (849.7) (1,266.9) (1,665.9)Issue Common Stock to Fund AFNSet Balance Sheet Cash Lower to Fund AFN

Forecasted Balance Sheets -- 10 Years


123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

BA BB BC BD BE BF BG BH BI BJ BK BL BM BN BO BPEnter Firm Ticker EMR

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Liquidity

Current 1.61 1.48 1.39 1.36 1.45 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35 1.35Quick 1.15 1.09 1.02 0.95 1.05 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97Net Working Capital to Total Assets 0.14 0.13 0.11 0.10 0.13 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10

Asset ManagementDays Sales Outstanding 69.30 68.54 68.68 67.37 68.89 68.55 68.55 68.55 68.55 68.55 68.55 68.55 68.55 68.55 68.55Inventory Turnover 8.96 9.16 9.54 9.06 10.14 9.09 9.09 9.09 9.09 9.09 9.09 9.09 9.09 9.09 9.09Fixed Assets Turnover 4.71 5.32 5.76 6.25 6.58 6.54 6.17 5.71 5.49 5.41 5.35 5.29 5.26 5.26 5.26Total Assets Turnover 0.92 0.95 1.00 1.08 1.15 1.03 1.02 1.01 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Debt ManagementLong-Term Debt to Equity 57.8% 43.3% 42.3% 38.4% 38.4% 44.1% 39.0% 37.6% 34.8% 31.3% 27.7% 23.2% 17.1% 10.6% 4.0%Total Debt to Total Assets 27.1% 24.7% 23.8% 21.6% 19.2% 24.7% 23.2% 22.8% 21.9% 20.7% 19.4% 17.7% 15.1% 12.0% 8.5%Times Interest Earned N/A N/A N/A N/A N/A 11.7 12.5 12.5 13.0 13.8 14.8 16.5 19.9 26.3 41.9

ProfitabilityGross Profit Margin 35.1% 35.6% 35.7% 35.6% 35.9% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5%Operating Profit Margin 10.1% 11.9% 12.4% 13.3% 13.8% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7% 13.7%Net After-Tax Profit Margin 7.3% 8.1% 8.2% 9.2% 9.5% 8.5% 8.6% 8.6% 8.6% 8.6% 8.7% 8.8% 8.9% 9.0% 9.1%Total Assets Turnover 0.92 0.95 1.00 1.08 1.15 1.03 1.02 1.01 1.00 1.00 1.00 1.00 1.00 1.00 1.00Return on Assets 6.2% 7.7% 8.3% 9.9% 10.9% 8.8% 8.8% 8.7% 8.6% 8.7% 8.7% 8.7% 8.8% 8.9% 9.1%Equity Multiplier 2.35 2.26 2.33 2.29 2.24 2.42 2.32 2.27 2.22 2.15 2.09 2.02 1.92 1.81 1.70Return on Equity 14.5% 17.4% 19.2% 22.6% 24.4% 21.3% 20.3% 19.7% 19.1% 18.6% 18.2% 17.6% 16.9% 16.2% 15.4%

EPS (using diluted shares, excluding extraordinary items) 1.20 1.49 1.70 2.24 2.66 2.66 2.89 3.17 3.50 3.87 4.28 4.70 5.09 5.46 5.82DPS (dividends per share) 0.79 0.80 0.83 0.89 1.04 1.10 1.17 1.24 1.32 1.40 1.48 1.57 1.67 1.77 1.88

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017NOPAT (net operating profit after tax) 1,013 1,257 1,422 1,845 2,136 2,335 2,522 2,774 3,051 3,356 3,692 4,024 4,306 4,564 4,793ROIC (return on invested capital) 20.4% 22.5% 25.3% 32.2% 35.1% 31.5% 30.5% 29.3% 28.7% 28.4% 28.2% 28.0% 28.0% 28.0% 28.0%EVA (economic value added) 504 683 845 1,257 1,511 1,573 1,674 1,802 1,958 2,143 2,349 2,552 2,725 2,889 3,033FCF (free cash flow) 617 1,393 1,740 1,778 1,000 1,684 1,561 1,875 2,183 2,431 2,760 3,255 3,640 3,976Weighted Average Cost of Capital 10.26% 10.26% 10.26% 10.26% 10.26% 10.26% 10.26% 10.26% 10.26% 10.26% 10.26%Net Operating Working Capital (NOWC) 1,994 2,659 2,622 2,510 2,657 3,589 3,877 4,264 4,691 5,160 5,676 6,187 6,620 7,017 7,368Operating Long Term Assets 2,962 2,937 3,003 3,220 3,431 3,833 4,384 5,209 5,959 6,663 7,408 8,162 8,779 9,306 9,771Total Operating Capital 4,956 5,596 5,625 5,730 6,088 7,423 8,260 9,473 10,650 11,823 13,084 14,348 15,399 16,323 17,139ROIC WACC Spread 24.82% 21.19% 20.26% 19.02% 18.39% 18.13% 17.95% 17.78% 17.70% 17.70% 17.70%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Long-term Horizon Value Growth Rate (user-supplied) 4.00%PV of Forecasted FCF, discounted at 10.26% $38,156 $41,073 $43,604 $46,519 $49,419 $52,308 $55,247 $58,157 $60,871 $63,479 $69,624Value of Non-Operating Assets $1,008 $1,503 $1,624 $1,786 $1,965 $2,161 $2,377 $2,591 $2,772 $2,939 $3,086Total Intrinsic Value of the Firm $39,164 $42,576 $45,228 $48,305 $51,384 $54,469 $57,624 $60,748 $63,643 $66,417 $72,710Intrinsic Market Value of the Equity $35,388 $36,599 $39,105 $41,596 $44,236 $47,017 $49,928 $53,083 $56,641 $60,510 $68,316Per Share Intrinsic Value of the Firm $44.02 $45.53 $48.64 $51.74 $55.03 $58.49 $62.11 $66.03 $70.46 $75.27 $84.98MVA (market value added) $26,616 $26,579 $27,707 $28,645 $29,529 $30,321 $30,981 $31,621 $32,431 $33,332 $37,971

Item Value Percent Cost Weighted Cost Risk Free Rate 4.00%ST Debt (from most recent balance sheet) 404 1.38% 3.20% 0.03% Beta 1.21LT Debt (from most recent balance sheet) 3,372 11.56% 5.49% 0.43% Market Risk Prem. 6.00%MV Equity (look up stock's mkt. cap and enter in cell BB53) 25,400 87.06% 11.26% 9.80% Cost of Equity 11.26%Weighted Average Cost of Capital 10.26%

values in millionsHistorical Ratios and Valuation Model

Capital Asset Pricing Model

Forecasted Ratios and Valuation Model -- 10 Years

Valuation Metrics Trend Analysis (NOPAT, EVA, MVA, FCF and Capital in millions) Forecasted Valuation Metrics -- 10 Years

Valuation (in millions where appropriate) -- through year 2017

Weighted Average Cost of Capital Calculations


123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

BQ BR BS BT BU BV BW BX BY BZ CA CB CC CD CE CF CG CH

Inputs 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017EPer share value (hist. & DCF est.) $28.93 $32.14 $35.11 $42.37 $55.69 $45.53 $48.64 $51.74 $55.03 $58.49 $62.11 $66.03 $70.46 $75.27 $84.98Market capitalization $24,249 $26,953 $29,138 $34,595 $44,207 $36,139 $38,613 $41,073 $43,680 $46,426 $49,301 $52,416 $55,929 $59,749 $67,458EBITDA $1,963 $2,285 $2,588 $3,069 $3,518 $4,084 $4,411 $4,852 $5,337 $5,871 $6,458 $7,039 $7,532 $7,983 $8,383Enterprise Value $27,791 $29,771 $32,145 $37,987 $47,166 $40,822 $43,338 $46,244 $49,136 $52,018 $54,949 $57,850 $60,544 $63,126 $69,194

MultiplesPrice/Sales 1.74 1.73 1.68 1.72 1.96 1.44 1.43 1.38 1.33 1.29 1.24 1.21 1.21 1.22 1.31Price/EBITDA 12.35 11.80 11.26 11.27 12.57 8.85 8.75 8.47 8.18 7.91 7.63 7.45 7.43 7.48 8.05Price/Free Cash Flow N/A 43.66 21.14 20.21 25.57 36.14 22.92 26.31 23.30 21.26 20.28 18.99 17.18 16.41 16.96Enterprise Value/EBITDA 14.16 13.03 12.42 12.38 13.41 10.00 9.83 9.53 9.21 8.86 8.51 8.22 8.04 7.91 8.25Price/Earnings 24.03 21.59 20.68 18.93 20.96 17.13 16.86 16.30 15.71 15.10 14.50 14.04 13.85 13.78 14.60Dividend Yield 2.71% 2.49% 2.36% 2.09% 1.87% 2.43% 2.41% 2.40% 2.40% 2.39% 2.39% 2.38% 2.37% 2.35% 2.21%

Historical OverrideValuation Estimates Based On: Average w/Manual 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E

Price/Sales 1.76 $55.00 $59.40 $65.34 $71.88 $79.07 $86.97 $94.80 $101.44 $107.52 $112.90Price/EBITDA 11.85 $60.96 $65.84 $72.42 $79.66 $87.63 $96.39 $105.07 $112.42 $119.17 $125.13Price/Free Cash Flow 27.64 $34.83 $58.66 $54.36 $65.29 $76.04 $84.65 $96.13 $113.37 $126.78 $138.49Enterprise Value/EBITDA 13.08 $67.29 $72.67 $79.94 $87.93 $96.72 $106.39 $115.97 $124.09 $131.53 $138.11Price/Earnings 21.24 $57.15 $62.06 $68.29 $75.35 $83.30 $92.13 $101.14 $109.42 $117.50 $125.18

Low Price $34.83 $58.66 $54.36 $65.29 $76.04 $84.65 $94.80 $101.44 $107.52 $112.90High Price $67.29 $72.67 $79.94 $87.93 $96.72 $106.39 $115.97 $124.09 $131.53 $138.49DCF Price $45.53 $48.64 $51.74 $55.03 $58.49 $62.11 $66.03 $70.46 $75.27 $84.98

Forecasted Stock Prices Based on Historical Multiples -- 10 Years

Historical Ratios and Valuation Forecasted Ratios and Valuation

In this section we are going to examine historical and forecasted ratios (or "multiples") typically used to value stocks ‐‐ P/CF, Enterprise Value/EBITDA, etc. We first want to compare the historical trends in these ratios to the trends in their forecasted values. If our forecasted multiples are systematically increasing or decreasing our forecasts may be too optimistic or pessimistic, and our forecast assumptions may have to be adjusted. Second, we want to compare our discounted cash flow valuation estimates with those derived from the various multiples. Once again, if there is a large discrepancy between our DCF valuation estimate of the company's stock and the range of values obtained from the various multiples, we may want to adjust our forecast assumptions. 1. You will need to look up the company's year‐end stock prices and enter them in the first 5 (historical) years of the "per share value" category.2. Use the estimated DCF price per share in the forecasted period (link to your forecasted prices in cells BG47‐BP47.3. Market capitalization will be calculated as basic weighted shares x historical year‐end prices and then forecasted basic weighted shares x DCF forecasted prices.4. As with previous calculations, historical multiples use actual historical values and forecasted multiples use forecasted values.

$40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150

Forecasted

Value

Per Sha

re

Forecasted Per Share Stock Values

Low Price DCF Price High Price

$30

$40

$50

$60

$70

$80

$90

0

5

10

15

20

25

DCF

Price

P/S an

d En

t. Value

/EBITD

A

Price/Sales and Enterprise Value/EBITDA vs. Price

Price/Sales Enterprise Value/EBITDA DCF Price


123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556

CI CJ CK CL CM CN CO CP CQ CR CS CT CU CV CW CX CY CZ DA DB

1%

2%

3%

4%

5%

6%

7%

8%

13

15

17

19

21

23

25

Dividen

d Yield

Price/Earnings Ratio

Price/Earnings Ratio and Dividend Yield

Price/Earnings Ratio Dividend Yield

0%

10%

20%

30%

40%

50%

0%

20%

40%

60%

80%

100%

Ope

r. an

d Net Profit M

argin

Gross M

argin

Gross, Operating and Net Profit Margins

Gross Margin Operating Margin Net Margin

0%

10%

20%

30%

40%

50%

60%

70%

ROA, R

OE an

d RO

IC

Return on Assets, Equity and Invested Capital

Return on Assets Return on Equity Return on Invested Capital

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

NOPAT an

d Free

Cash Flow

NOPAT and Free Cash Flow (millions)

NOPAT Free Cash Flow

$25,000

$27,000

$29,000

$31,000

$33,000

$35,000

$37,000

$39,000

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Market V

alue

Add

ed

Econ

omic Value

Add

ed

Economic Value Added & Market Value Added (millions)

Economic Value Added Market Value Added

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

EPS an

d DPS

Earnings and Dividends Per Share

Earnings Per Share Dividends Per Share

Documents

Emerson Electric Co. - Washburn University · Student Investment Fund Stock Report Analysts: Randy Kidder & Michael Hooper Emerson Electric Co. NYSE: EMR Recommendation: Buy Market