Emerson Electric Co. : The Industrial Software Flywheel

Published: 2026-02-16 02:37:25 ET EMR

Founded in 1890 and headquartered in St. Louis, Missouri, Emerson has evolved into a global automation leader, focused on helping process, hybrid, and discrete manufacturers optimize operations through a broad portfolio of intelligent devices, control systems, and industrial software.

Grégoire Legrand

Published on 02/16/2026 at 02:37 am EST

Automation is driven by companies needing more reliable energy and more power capacity (from grids to LNG buildouts), where they’re automating faster to cut downtime and labor intensity. Emerson is positioning right in the middle of that, with momentum concentrated in the end markets: Power, LNG, Life Sciences, Semiconductors, and Aerospace & Defense.

Today, Emerson reports two primary business groups - Intelligent Devices and Software and Control - alongside Safety & Productivity, with the portfolio shaped by large acquisitions over the past several years. It acquired National Instruments (NI) in October 2023 and acquired the remaining outstanding shares of AspenTech in March 2025, while divesting non-core assets such as Climate Technologies (Copeland) and InSinkErator.

Emerson’s Intelligent Devices business is the company’s largest revenue contributor and is built around equipment that measures, controls, and automates industrial processes. In 2025, Intelligent Devices sales were $12.4 billion, up from $12.2 billion in 2024 and $11.6 billion in 2023, supported by price and strength in end markets such as power. Within Intelligent Devices, Final Control (valves, regulators, actuators) grew from $4.2 billion in 2024 to $4.4 billion in 2025; Measurement & Analytical (instrumentation across pressure, flow, temperature, corrosion, and more) rose from $4.1 billion to $4.1 billion; and Discrete Automation (pneumatics, motion, control and distribution equipment used in discrete industries) was broadly stable around $2.5 billion. Safety & Productivity (professional tools and equipment under brands like RIDGID and Greenlee) declined modestly to $1.36 billion in 2025.

The Software and Control business group is Emerson’s core “automation platform” layer, combining control systems and software (including AspenTech) with test & measurement (NI). In 2025, Software and Control sales were $5.7 billion, up from $5.4 billion in 2024, driven by Control Systems & Software rising 7% to $4.2 billion and Test & Measurement modestly increasing to $1.49 billion. It’s basically Emerson’s software + controls engine - everything from plant control and safety systems to SCADA, digital twins, asset performance, and cybersecurity - plus AspenTech’s optimization tools that help customers run plants more efficiently.

In 2025, Intelligent Devices generated about $3.0B of segment earnings, a 23.8% margin, and a 25.9% adjusted EBITA margin. Software & Control was even higher, with a 31.0% adjusted EBITA margin, helped by stronger profitability in Control Systems & Software and benefits from the NI integration. Consolidated backlog at the end of 2025 was $8.6 billion (vs. $8.4 billion in 2024), with about 75% expected to convert into revenue within 12 months. In Q1 2026, management highlighted an ending project funnel of $11.1B, with roughly 80% tied to growth verticals.

In Q1 2026, net sales rose 4% YoY to $4.35 billion, with 2% underlying sales growth and 9% underlying orders growth. Adjusted EPS increased 6% to $1.46, while adjusted segment EBITA margin was 27.7%. Segment performance was led by Software & Systems (sales $1.45B, 31.3% adjusted EBITA margin), Intelligent Devices (sales $2.39B, 26.9% margin), and Safety & Productivity (sales $503M, 20.9% margin).

Operating cash flow rose from $2.71B in 2023 to $3.32B in 2024 and $3.68B in 2025; FCF rose from $2.35B to $2.90B to $3.25B over the same period, reaching 18.0% of sales in 2025. Revenue has also stepped up as the portfolio shifted: net sales were $17.5B in 2024 (up 15% from 2023), and 2025 net sales were $18.0B.

For 2026, Emerson is guiding to about 5.5% GAAP sales growth, around 28% adjusted segment EBITA margin, $6.40–$6.55 in adjusted EPS, and $3.5-$3.6B of FCF, and more cash back to shareholders with $2.2B total, split between about $1.2B in dividends and $1.0B in buybacks. The 2028 targets are $21B of sales, 30% margin, $8.00 EPS, 20% FCF margin, and $10B returned to shareholders over 2026-2028.

Emerson is now an automation + industrial software company, focused on where spending is holding up - power, LNG, life sciences, semis, and aerospace & defense. The outlook is solid as long-cycle projects and plant modernization continue, and the portfolio keeps shifting toward higher-value control, measurement, and software. Key risks are a slowdown in cyclical/discrete markets (especially China/Europe), NI and AspenTech integration execution, and some lumpiness from project milestones and software renewal timing.