The market is about right about the recovery. Power upgrades and chip testing should lift earnings, but the automation premium leaves limited room for disappointment. My twelve-month target is $173.58 a share.
Key points
- $7.89 a share is my fiscal 2028 adjusted earnings forecast.
- 7% order growth in the June quarter supports expansion without a China rebound.
- $173.58 a share is my October 2027 target: hold, not a bet against automation.
The call
The market is about right about the recovery. At 22 times forward earnings, today's quote requires $7.43 a share in fiscal 2028. That needs continued sales growth and roughly 28% adjusted segment profit margins, excluding acquisition amortization and restructuring.
Testing and devices, not software, lifted segment profitSource: Emerson August 4, 2026 release; adjusted segment EBITA, $ millions, June quarters.
I expect steady growth, not a sudden boom. Power upgrades and chip testing support my forecast; Rockwell's results independently confirm stronger American automation demand. Testing and devices drove the latest profit increase, while controls and software stalled. Outperformance over three, six and twelve months argues against selling solely on valuation.
Valuation
| October 2027 valuation driver | My estimate |
|---|
| Fiscal 2028 sales | $21.2 billion |
| Fiscal 2028 adjusted segment profit margin | 29.8% |
| Fiscal 2028 adjusted earnings per share | $7.89 |
| Core earnings multiple | 20 times |
| Automation premium | $15.78 a share |
| Twelve-month target | $173.58 a share |
Sales grow 6% in fiscal 2027 and 5.5% in fiscal 2028; my model retains employee stock-award costs and assumes modest repurchases. The premium adds two times earnings for durable power and software demand, but disappears if orders weaken. A lower multiple could erase the earnings gain, limiting this to hold; fiscal 2027 guidance is the next test.
The automation premium decides the share-price outcomeAnalyst scenarios, October 13, 2026: FY28E adjusted EPS $7.89; dollars per share.
Risks
- Cash disappoints: watch fiscal fourth-quarter tax payments after June's unusually strong cash collection.
- Inventories outrun demand: June inventory exceeded September's level by 14%; watch orders and stock clearance.
- Financing stays expensive: June net debt was $10.9 billion, including current borrowings; watch interest costs and refinancing.
What would change my mind
Two quarters of orders growing above 10%, with software contract-value growth above 12%, would justify a higher earnings forecast and premium.