Rockwell Defies the Market’s Dour Expectations; We Raise FVE by 2%

After reviewing wide-moat Rockwell Automation's fiscal third-quarter results, we bump up our fair value estimate to $295 from $290. The 2% raise was due to time value of money and a nominal earnings guidance raise on lower expected taxes. We continue to model on the lower end of the revenue and adjusted EPS guidance ranges ($7.74 billion expected sales and $9.32 in expected adjusted EPS). That said, we still believe the stock has some persistent undervaluation, even with the near 10% price appreciation during the trading day. Our fair value implies over 20% upside in the name.