How Emerson Electric Charged Up Strong Returns


The year 2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at Emerson Electric (NYS: EMR) . The company is best-known for its 56-year streak of annual dividend increases, but the electrical equipment maker has seen its business suffer from sluggishness in Europe and elsewhere in a slow global economy. Below, you'll find more on what moved shares of Emerson Electric this year.

Stats on Emerson Electric

Year-to-date stock return


Market cap

$38.6 billion

Revenue, past 12 months

$24.4 billion

Net income, past 12 months

$1.97 billion

1-year revenue growth


1-year net income growth


Dividend yield


CAPS rating


Source: S&P Capital IQ.

What helped Emerson Electric's stock advance in 2012?
Emerson didn't have the best 2011, falling about 15% in the wake of poor economic conditions around the world. The company's earnings miss in February shows some of the challenges that Emerson has had to face, as flooding in Thailand led to disappointing results. Yet that hasn't stopped the company from taking steps to bolster its long-term prospects through strategic acquisitions.

Emerson also hasn't been willing to rest on its laurels and coast on previous successes. Early this year, it said it would buy the marine container and boiler business of Johnson Controls (NYS: JCI) to try to bolster its footprint to include meeting the heating and refrigeration needs of the shipping industry. Still, with Eaton (NYS: ETN) having made a huge acquisition of electrical equipment maker Cooper Industries to boost its energy and power market exposure and with General Electric (NYS: GE) having made big inroads toward elevating its energy infrastructure unit, Emerson and ABB (NYS: ABB) both face huge competitors in their efforts to take advantage of the huge drive toward improving power grids and energy infrastructure.

Despite these challenges, Emerson delivered on a 56th consecutive annual dividend increase this November, boosting its payout by 3%. If the economy starts to get stronger around the world, its investors can expect 2013 to continue 2012's winning ways for its stock.

Will GE crash Emerson's party?
General Electric has survived its declines from the recent financial crisis and has moved toward energy infrastructure and equipment, moving more closely into competition with Emerson. Which company will win out? Find out whether GE has the inside track against Emerson and its competitors in our premium research report on GE, which details the conglomerate's multiple businesses. You'll find reasons to buy or sell GE, and you'll receive continuing updates as major events unfold during the year. To get started, click here now.

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Fool contributor Dan Caplinger has no positions in the stocks mentioned above. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of ABB and General Electric. Motley Fool newsletter services recommend Emerson Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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