Head to Head Comparison: Emerson Electric (NYSE:EMR) versus Vertiv (NYSE:VRT)

Vertiv (NYSE:VRT) and Emerson Electric (NYSE:EMR) are both large-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vertiv	15.09%	50.47%	15.87%
Emerson Electric	13.83%	17.58%	8.50%

Dividends

Vertiv pays an annual dividend of $0.25 per share and has a dividend yield of 0.1%. Emerson Electric pays an annual dividend of $2.22 per share and has a dividend yield of 1.4%. Vertiv pays out 5.7% of its earnings in the form of a dividend. Emerson Electric pays out 48.6% 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. Vertiv has increased its dividend for 2 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Vertiv and Emerson Electric, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vertiv	0	3	23	3	3.00
Emerson Electric	1	10	13	0	2.50

Vertiv currently has a consensus price target of $348.54, suggesting a potential upside of 18.37%. Emerson Electric has a consensus price target of $166.96, suggesting a potential upside of 2.38%. Given Vertiv’s stronger consensus rating and higher possible upside, analysts clearly believe Vertiv is more favorable than Emerson Electric.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vertiv	$10.23 billion	11.08	$1.33 billion	$4.42	66.62
Emerson Electric	$18.02 billion	5.07	$2.29 billion	$4.57	35.68

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

Volatility & Risk

Vertiv has a beta of 2.06, indicating that its stock price is 106% more volatile than the S&P 500. Comparatively, Emerson Electric has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500.

Insider & Institutional Ownership

89.9% of Vertiv shares are held by institutional investors. Comparatively, 74.3% of Emerson Electric shares are held by institutional investors. 1.1% of Vertiv shares are held by company insiders. Comparatively, 0.2% of Emerson Electric shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

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

About Vertiv

Vertiv Holdings Co, together with its subsidiaries, designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. It offers AC and DC power management products, switchgear and busbar products, thermal management products, integrated rack systems, modular solutions, and management systems for monitoring and controlling digital infrastructure that are integral to the technologies used for various services, including e-commerce, online banking, file sharing, video on-demand, energy storage, wireless communications, Internet of Things, and online gaming. The company also provides lifecycle management services, predictive analytics, and professional services for deploying, maintaining, and optimizing its products and their related systems; and preventative maintenance, acceptance testing, engineering and consulting, performance assessments, remote monitoring, training, spare parts, and digital critical infrastructure software services. It offers its products primarily under the Vertiv, Liebert, NetSure, Geist, E&I, Powerbar, and Avocent brands. The company serves cloud services, financial services, healthcare, transportation, manufacturing, energy, education, government, social media, and retail industries through a network of direct sales professionals, independent sales representatives, channel partners, and original equipment manufacturers. Vertiv Holdings Co is headquartered in Westerville, Ohio.

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.