S&P sizes Emerson Electric's backlog $1.4 billion below its 10-K

Emerson Electric▼−0.32% — Emerson Electric, down 0.32 percent today closed €750 million of euro debt today at a 4% coupon, and the credit rating behind the deal describes an order book $1.4 billion smaller than the one in Emerson's own annual filing. One of those two documents is measuring the asset the whole investment case rests on, and investors need to know which.

We wrote on November 4 that Emerson beat, orders rose 14% and the stock fell as its fiscal 2027 plan spends all free cash flow. What is new since: the 10-K on November 9, S&P's rating note on November 10↗, and the pricing 8-K on November 12. The sales, earnings and guidance figures below were already in that coverage; the coupon and the backlog discrepancy are what the last three days added.

The new euro notes cost more than the euro debt Emerson already owes

The 8-K filed November 12↗ shows Emerson priced €750 million of 4.000% senior unsecured notes due 2032 at 99.639% to the public, with net proceeds of about €744.5 million, or $830 million, going mainly to repay commercial paper, its short-term borrowings ¹. S&P Global RatingsPVT$123B — S&P Global Ratings, private, latest valuation $123B rated the notes 'A', in line with its rating on the company ².

Like-for-like, the money got dearer. In March 2025 Emerson issued euro notes at 3.0% due 2031 and 3.5% due 2037 ³. Today's euro money carries a full point above the lower of those. Net interest expense has climbed to $334 million in fiscal 2026 from $237 million and $175 million the two years before, as debt from the buyout of AspenTech, the software company Emerson took private, works through the accounts ³. Refinancing short-term paper at 4% does not reverse that direction ³.

The order book carries two different numbers

Emerson's 10-K↗ reports a consolidated backlog of $9.6 billion at September 30, up from $8.6 billion a year earlier, with about 70% converting to revenue within 12 months ⁴. S&P, one day after the 10-K, put the backlog at $8.2 billion, called it an 11% increase, and expects 70% to 75% converted as leverage holds near 2x adjusted debt to EBITDA in fiscal 2027 ².

Against Emerson's own year-ago base, $8.2 billion is a decline, not an 11% rise. S&P is measuring something else and has not said what. The two documents disagree by $1.4 billion.

The buy case rests on that order book converting at a 53.4% gross margin, with adjusted earnings guided to about $7.25 a share for fiscal 2027, figures already reported last week ³. The sell case, as DA Davidson, an investment-research firm, signaled with a Neutral rating and a $160 target against a $167 close, is that the order flow is already in the price ⁵.

The gap is unresolved. Until S&P explains its number, screen on the filing Emerson signed: the $9.6 billion backlog and the 4% cost of the money that carries it.