There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

October 10, 2011 - Emerson Electric Co. (EMR-NYSE) operates as a diversified manufacturing and technology company. The company creates appliance solutions, climate technologies, industrial automation, motor technology, network power, process management, professional tools, and storage solutions businesses.

The company's motor technology sells appliance motors, HVACR motors, DC motors, fractional horsepower motors, integral horsepower and larger motors, and drives; network power business provides power, precision cooling, connectivity, and embedded solutions.

Process Management makes various wireless related products from self-organizing field networks to wireless asset and people tracking. Its professional tools business offers pipe working and threading equipment, pressing technology, utility locating and visual diagnostics systems, drain maintenance tools, power tools, air tools, general purpose hand tools, wet/dry vacs, job site storage equipment, truck tool boxes and equipment, and van storage equipment. Storage solutions provides shelving and storage products for residential, commercial, and foodservice needs, as well as offers specialized carts, mobile computer workstations, and cabinet fixtures. The company was founded in 1890 and is headquartered in St. Louis, Missouri.

Emerson Electric's stock is off its recent all-time high of $64.60 (split adjusted for a 2 for 1 split in 2006) by 20 points. That may mean it's a good buying opportunity. Or it could mean that investors have deep concerns. Here's what we know.

Earnings continue to move higher. While they dipped in 2009 to $2.27 from $3.11 in '08, they're back on an upward track. Last year, they were $2.60. This year, 23 analysts have a consensus estimate of $3.23, then see $3.66 in 2012. For the third quarter, just completed on September 30, they predict 97 cents, well above the 81 cents in last year's third period. For the final quarter, look for 75 cents, compared to 63 cents in last year's fourth.

Order growth continues. Organic order growth in July was up 6%, in August, up 8% (excluding currency gains). Earlier in the year, orders were up 15% but then weakened. A strong contributor to new orders was the Process Management division, a natural beneficiary of tough economic times since its products reduce plant maintenance costs and capital requirements. They also make industrial processes easier and safer. One industry in particular that has increased orders: oil drilling. The upstream operation makes rigs run more efficiently. Since September of last year this group's growth rate has been above 20% and is expected to remain solid as more oil drilling should result from higher oil prices.

Another division, Network Power, is aggressively working on two markets: China and India. Part of the expansion plan is to price very competitively in certain products to win market share, but it's also not bidding on less profitable projects.

While China telecom business has been waning, orders for energy efficient devices in China and North America for reliable power products has more than offset the slower demand. Also a concern: labor costs are going higher which may put pressure on profit margins unless pricing can improve.

The Industrial Automation group saw a marked decrease in demand in August. In June, order growth rate was above 20%. By August, growth was at zero. Demand for electrical drives and power transmission products has noticably weakened.

Still, EMR enjoys a large backlog which will keep earnings strong for a while. That's why the September quarter is estimated to be well above last year. But that backlog can only sustain growth for so long. One of the concerns management voiced recently was the inability of the U.S. and European governments to resolve debt problems and excess spending. Both influence capital spending by business which ultimately will hurt EMR. This concern is most likely the main reason for the recent pullback in the stock's price.

Essential Numbers:

- Trailing P/E:13.88
- Forward P/E: 12.17
- Price to sales ratio: 1.39
- Price to book: 3.03
- Operating margin: 17.00%
- Profit margin: 10.49%
- Return on equity: 23.30%
- Return on assets: 10.62%
- Revenues (last 12 months): $23.52 billion
- Total cash: $1.78 billion
- Cash per share: $2.39
- Total debt: $5.22 billion
- Total debt/equity: 47.41%
- Current ratio: 1.47
- Book value per share: $14.52
- 52 wk change: -17.62%
- Shares Outstanding: 744.70 million
- Float: 740.71 million
- Insiders own: .32%
- Institutions own: 73.70%
- Dividend: $1.38
- Yield: 3.0%

Conservative investors will like the large amount of cash, the solid Financial Strength rating, and the decent dividend. The slowdown in orders for two of EMR's divisions may be only temporary. The key will be a European debt resolution and the U.S. government's spending habits. Once resolved, businesses will be more willing to spend on capital equipment. Then the already large backlog EMR enjoys should grow even more.

- Company Web site: www.emerson.com

Ted Allrich