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Growth & Income

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Rockwell Automation (ROK - Analyst Report) has bright prospects for growth, especially in emerging markets. Additionally, the company's focus on customer success continues to provide superior long-term returns for its shareholders.

Growth and Income

The company is expected to grow its earnings per share 91.0% in fiscal 2010, 27.0% in fiscal 2011, and 12.0% over the next three to five years. The stock also offers investors a dividend yield of 2.2%.

This Zacks #2 Rank stock trades at 17.6x fiscal 2010 consensus EPS estimates and 13.9x fiscal 2011 consensus EPS estimates.

Business

Rockwell Automation provides industrial automation power, control, and information solutions. The company operates in two segments, Architecture & Software, and Control Products & Solutions.

Fiscal Second-Quarter Results

On April 28, Rockwell announced fiscal Q2 revenue of $1.16 billion, up 10% compared to $1.06 billion in the year-ago quarter. The company earned $0.77 per share, topping the Zacks Consensus Estimate by 26 cents, or 51%.

Chairman and CEO Keith Nosbusch said, "We saw a return to year-over-year organic growth in the quarter, with continued momentum in our product revenues, meaningful growth in North America and mid-teens growth in emerging Asia. Increased volume, favorable mix and the impact of our previous cost reduction actions all contributed to significant year-over-year margin improvement in the quarter."

In the second half of the year, the company plans to increase its spending on customer-facing resources in its highest growth markets and innovation in its product, services and solutions offerings. Based on this outlook, Rockwell raised its full-year fiscal 2010 guidance to $4.65 billion to $4.8 billion in revenue and EPS of $2.60-$2.90.

Balance Sheet

At the end of the second quarter, the company had cash of $817 million. Its long-term debt-to-equity ratio was 63.8%.

Estimates

After the company's strong Q2 report and upbeat guidance, the Zacks Consensus Estimate for fiscal 2010 increased 56 cents, or 23.7%, to $2.92, and the Zacks Consensus Estimate for fiscal 2011 climbed 55 cents, or 17.4%, to $3.71.

In the last four quarters, the company has beaten the Zacks Consensus Estimate by an average 40.7%.

The Chart

ROK shares are up 68% since bottoming in July 2009. The stock topped out $63.90 in late April. In the last two months, ROK has dropped around 20% from its highs. It is still trading above the 200-day moving average, and the uptrend is still intact.

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