Company Reports

The market sent Rockwell’s shares down 15% in intraday trading, following the company’s first-quarter earnings and sales miss. Adjusted EPS declined 17% year on year to $2.04 and was 22% lower than the FactSet consensus estimates. Management pointed to increased investment spending, lower supply chain utilization, and negative sales mix. Higher investment spending had the biggest impact, bringing adjusted EPS down by $0.40 in the quarter.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it is one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems the Connected Enterprise.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it is one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems the Connected Enterprise.

We maintain our $310 fair value estimate following wide-moat Rockwell’s fiscal fourth-quarter and full-year results. Sales rose a resounding 20.5% year on year or 18% on an organic basis. Rockwell’s sales growth was broad-based, but organic sales were exceptional in Rockwell’s software and control business, rising over 23% year on year. This segment sells Rockwell’s programmable logic controllers and digital twin software, among other solutions.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it is one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems the Connected Enterprise.

We see no reason to change our $310 fair value estimate following wide-moat Rockwell’s fiscal third-quarter results. Results were below expectations on the top and bottom lines, but income-related guidance was unchanged. Consequently, our sales and operating margin expectations were relatively unchanged, though cash conversion was a good deal south of what we previously earmarked.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems the Connected Enterprise.

Wide-moat-rated Rockwell Automation had a great fiscal second quarter, but nothing in its latest results alters our long-term fundamental view. In fact, our midcycle operating margin remains unchanged. Perhaps more importantly, also relatively unchanged is our view of cumulative economic profit generation during our explicit forecast.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems the Connected Enterprise.

Nothing in wide-moat-rated Rockwell Automation's latest results materially alters our long-term view of the firm. We lift our fair value estimate to $310 from $306, due to time value of money (slightly offset by a higher share repurchase price assumption). Despite the full-year guidance increase, which we now incorporate in our model, we aren't making meaningful changes to our long-term assumptions, as we think the revisions mostly affect the timing of cash flows. Over the long run, we still expect strong mid-single-digit organic growth, coupled with a 1% contribution from acquisitions. We now expect $8.7 billion of full-year 2023 sales (versus $8.5 billion previously), and $11.11 of adjusted EPS (versus $10.77 previously), around the midpoint of the revised guide.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems the Connected Enterprise.

We were surprised by the market’s negative reaction to Rockwell’s fiscal fourth-quarter and 2023 results. In fact, Rockwell’s reported revenue during the fourth quarter was nearly lineball accurate with our projections, while the firm outperformed our segment operating margins by 140 basis points. Adjusted EPS did fall below expectations, though GAAP EPS outperformed. Furthermore, sales guidance came ahead of our expectations, though segment operating margin and adjusted EPS guidance were right in line with what we earmarked. We raise our fair value estimate to $306 from $295, partially due to time value of money and partially due to our revised sales outlook.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell deems its Connected Enterprise.

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.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell calls its Connected Enterprise.

Wide-moat Rockwell Automation had a rough fiscal second quarter and meaningfully whiffed on our expectations, but nothing in its latest results alters our long-term, fundamental view of the firm. While we lowered our full-year fiscal 2022 assumptions on the cusp of disappointing results and management’s lowered guidance, time value of money fully offset these effects in our model. Therefore, we maintain our $290 fair value estimate.

We view Rockwell as the highest quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell calls its Connected Enterprise.

Supply chain disruptions continue to be the story in the industrials sector, and we think the tradeoff in wide-moat rated Rockwell’s stock following fiscal first-quarter 2022 earnings reflects the market’s bearish sentiment. These supply chain concerns prompted management to maintain guidance, which we think contributed to the stock’s sell-off during the trading day, particularly as Rockwell’s valuation returned to more rational levels in the two weeks prior to this print. Nonetheless, we think there is some conservatism baked into the guide, despite many industrial CEOs describing the current operating environment as the most difficult in their lifetimes.

We view Rockwell as the highest-quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell calls its Connected Enterprise.

We view Rockwell as the highest-quality automation player on the west side of the Atlantic based on quality, breadth of offerings, and shrewd strategic partnerships. Today, it’s one of the best-in-breed competitors seeking to gain a stronger foothold where technology meets traditional manufacturing, which Rockwell calls its Connected Enterprise.