Emerson Electric (NYSE:EMR) vs. Franklin Electric (NASDAQ:FELE) Financial Analysis

Franklin Electric (NASDAQ:FELE) and Emerson Electric (NYSE:EMR) are both industrials companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Institutional & Insider Ownership

80.0% of Franklin Electric shares are held by institutional investors. Comparatively, 74.3% of Emerson Electric shares are held by institutional investors. 2.7% of Franklin Electric shares are held by insiders. Comparatively, 0.5% of Emerson Electric shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Franklin Electric and Emerson Electric’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Electric	8.71%	14.05%	9.47%
Emerson Electric	14.92%	14.34%	7.79%

Risk & Volatility

Franklin Electric has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, Emerson Electric has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Dividends

Franklin Electric pays an annual dividend of $1.06 per share and has a dividend yield of 1.1%. Emerson Electric pays an annual dividend of $2.11 per share and has a dividend yield of 1.6%. Franklin Electric pays out 27.4% of its earnings in the form of a dividend. Emerson Electric pays out 45.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Franklin Electric has increased its dividend for 33 consecutive years and Emerson Electric has increased its dividend for 68 consecutive years. Emerson Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Franklin Electric and Emerson Electric”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Electric	$2.02 billion	2.12	$180.31 million	$3.87	24.89
Emerson Electric	$17.49 billion	4.34	$1.97 billion	$4.65	28.99

Emerson Electric has higher revenue and earnings than Franklin Electric. Franklin Electric is trading at a lower price-to-earnings ratio than Emerson Electric, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for Franklin Electric and Emerson Electric, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Electric	0	2	0	0	2.00
Emerson Electric	1	5	11	2	2.74

Franklin Electric presently has a consensus target price of $107.00, suggesting a potential upside of 11.09%. Emerson Electric has a consensus target price of $144.88, suggesting a potential upside of 7.49%. Given Franklin Electric’s higher probable upside, equities analysts clearly believe Franklin Electric is more favorable than Emerson Electric.

Summary

Emerson Electric beats Franklin Electric on 13 of the 18 factors compared between the two stocks.

About Franklin Electric

Franklin Electric Co., Inc., together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide. The company operates through Water Systems, Fueling Systems, and Distribution segments. The Water Systems segment offers submersible motors, drives, pumps, electronic controls, water treatment systems, monitoring devices, and related parts and equipment. Its motors and pumps are used principally for pumping clean water and wastewater in various residential, agricultural, municipal, and industrial applications; and manufactures electronic drives and controls that are used in motors for controlling functionality, as well as provides protection from various hazards, such as electrical surges, over-heating, and dry wells or tanks. The Fueling Systems segment provides pumps, pipes, sumps, fittings, vapor recovery components, electronic controls, monitoring devices, and related parts and equipment primarily for use in fueling system applications. This segment serves other energy markets, such as power reliability systems, as well as includes electronic devices for online monitoring of the power utility, hydroelectric, and telecommunication and data center infrastructure. The Distribution segment sells to and provides presale support and specifications to the installing contractors. It sells products produced by the Water Systems segment. The company sells its products to wholesale and retail distributors, specialty distributors, original equipment manufacturers, industrial and petroleum equipment distributors, and oil and utility companies through its employee sales force and independent manufacturing representatives. Franklin Electric Co., Inc. was founded in 1944 and is headquartered in Fort Wayne, Indiana.

About Emerson Electric

Emerson Electric Co., a technology and software company, provides various solutions for customers in industrial, commercial, and consumer markets in the Americas, Asia, the Middle East, Africa, and Europe. It operates in six segments: Final Control, Control Systems & Software, Measurement & Analytical, AspenTech, Discrete Automation, and Safety & Productivity. The Final Control segment provides control, isolation, shutoff, pressure relief, and pressure safety valves, actuators, and regulators for process and hybrid industries. The Measurement & Analytical segment offers intelligent instrumentation measuring the physical properties of liquids or gases, such as pressure, temperature, level, flow, acoustics, corrosion, pH, conductivity, water quality, toxic gases, and flame. The Discrete Automation segment offers solenoid and pneumatic valves, valve position indicators, pneumatic cylinders, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems, electrical distribution equipment, and materials joining solutions. The Safety & Productivity segment offers tools for professionals and homeowners; pipe-working tools, including pipe wrenches, pipe cutters, pipe threading and roll grooving equipment, battery hydraulic tools; electrical tools; and other professional tools. The Control Systems & Software segment provides distributed control systems, safety instrumented systems, SCADA systems, application software, digital twins, asset performance management, and cybersecurity. The Test & Measurement provides software-connected automated test and measurement systems. The AspenTech segment provides asset optimization software that enables industrial manufacturers to design, operate, and maintain operations for enhancing performance through a combination of decades of modeling, simulation, and optimization capabilities. The company was incorporated in 1890 and is headquartered in Saint Louis, Missouri.