Emerson Electric Co. (NYSE:EMR) — The diversified global manufacturing company provides technological and engineering solutions for the industrial, commercial and consumer markets.
Europe accounts for about 20% of the company’s sales. And S&P Capital IQ estimates that revenue from European operations will remain weak through the first half of Emerson’s fiscal year, ending in September. Its analysts also project a continued negative currency impact to the company’s oil and gas operations.
In February, Capital IQ cut its fiscal 2015 EPS estimates to $3.88 from $4.04 and lowered fiscal 2016 estimates to $4.11 from $4.40. It also cut the target price for EMR stock to $64 from $71. This appears to imply shares are currently oversold, closing last week at $55.26. However, when analysts start to lower earnings and price objectives, a “piling on” effect often occurs, resulting in more cuts and a falling share price.
EMR stock is in a pronounced bear market. Its bearish resistance line roughly matches its 200-day moving average at $62.87. But the intermediate resistance line at about $58 and the 50-day moving average at $58.56 should restrict any near-term rally.
On Tuesday, EMR stock broke a double-bottom at about $56.50, confirming that its bear market is still intact.
If you own EMR stock, sell it at the market price. Traders can sell EMR short at $56.50 with a price objective of $48 for a 15% return. Short-selling is a speculative technique that is not suited for all investors. Check with your broker to confirm their ability to borrow shares and ask about any other restrictions that may apply.
