Financial Comparison: Emerson Electric (EMR) vs. FARO Technologies (FARO)

Emerson Electric (NYSE: EMR) and FARO Technologies (NASDAQ:FARO) are both industrial products companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, valuation and risk.

Risk & Volatility

Emerson Electric has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500. Comparatively, FARO Technologies has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500.

Insider & Institutional Ownership

70.0% of Emerson Electric shares are owned by institutional investors. Comparatively, 94.7% of FARO Technologies shares are owned by institutional investors. 0.8% of Emerson Electric shares are owned by insiders. Comparatively, 2.4% of FARO Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Emerson Electric and FARO Technologies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Emerson Electric $20,200.00 2.02 $1,635.00 $2.25 28.28
FARO Technologies $325.58 2.64 $11.10 $0.00 -5,150,000.00

Emerson Electric has higher revenue and earnings than FARO Technologies. FARO Technologies 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 recent recommendations for Emerson Electric and FARO Technologies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 2 8 4 0 2.14
FARO Technologies 0 2 4 0 2.67

Emerson Electric currently has a consensus price target of $64.45, suggesting a potential upside of 1.31%. FARO Technologies has a consensus price target of $48.80, suggesting a potential downside of 5.24%. Given Emerson Electric’s higher probable upside, analysts clearly believe Emerson Electric is more favorable than FARO Technologies.

Profitability

This table compares Emerson Electric and FARO Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 8.89% 22.32% 9.25%
FARO Technologies 0.03% 0.03% 0.02%

Dividends

Emerson Electric pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. FARO Technologies does not pay a dividend. Emerson Electric pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FARO Technologies has raised its dividend for 60 consecutive years.

Summary

Emerson Electric beats FARO Technologies on 8 of the 15 factors compared between the two stocks.

Emerson Electric Company Profile

Emerson Electric Co. is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications. The Company provides measurement, control and diagnostic technologies for automated industrial processes.

FARO Technologies Company Profile

FARO Technologies, Inc. designs, develops, manufactures, markets and supports software driven, three-dimensional (3D) measurement, imaging and realization systems. The Company operates in three segments: Factory Metrology, Construction BIM-CIM and Other. It sells its products through a direct sales force across customers in a range of manufacturing, industrial, architecture, surveying, building construction and law enforcement applications. Its FaroArm, FARO Laser ScanArm, FARO Gage, FARO Laser Tracker, FARO Cobalt Array 3D Imager AMP, and their companion CAM2 software provide for Computer-Aided Design-based inspection and/or factory-level statistical process control and surveying. It operates in international markets throughout the world and maintain sales offices in Australia, Brazil, Canada, China, India, Italy, Japan, Malaysia, Mexico, the Netherlands, Poland, Portugal, Singapore, South Korea, Spain, Switzerland, Thailand, Turkey, the United Kingdom, the United States and Vietnam.

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