We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Rockwell Automation to Gain from New Products, Risks Stay
Read MoreHide Full Article
On Sept 14, 2016, we issued an updated research report on Rockwell Automation, Inc. (ROK - Free Report) . The company is a provider of industrial automation power, control and information solutions. The company stands to benefit from its differentiated technology and domain expertise, product launches, diversification of sales streams by expansion of products portfolio and share repurchases. However, weaknesses in mining and lower oil prices remain matters of concern.
Rockwell Automation reported adjusted earnings per share of $1.55 in fiscal third-quarter 2016, down 3% year over year. Rockwell Automation revised its fiscal 2016 adjusted EPS guidance to $5.80–$6.00 from the previous range of $5.75–$6.15. The company expects revenue to shrink 7% for the full year, which includes a currency headwind of about 3% and an organic sales decline of 4%.
During the quarter, Rockwell Automation’s Control Products & Solutions segment saw a larger amount of project delays in solutions and services businesses in the U.S. The company anticipates this trend in delays to continue into fiscal fourth-quarter. Consequently, it curbed the previous projections for sales in this business for the fourth quarter as well.
Rockwell Automation expects persistent improvement in overall product sales in fiscal fourth-quarter 2016. Its differentiated technology and domain expertise will deliver positive business outcomes for customers and consistently simplifying their experience. Further, understanding fosters loyalty; combining technology and expertise increases customer share, preserves margins, and reduces cyclicality.
In fiscal 2016, Rockwell will launch an unprecedented number of new products, including the next-generation high-performance integrated control and information architecture. Even under challenging market conditions, producers and equipment builders need Rockwell Automation’s technology and expertise to achieve their business objectives. The long-term secular drivers for industrial automation and information remain intact and the company continues to enhance its competitive differentiation in order to expand the value provided to customers and gain market share.
During fiscal third-quarter 2016, Rockwell Automation repurchased 1.1 million shares at a cost of $122 million. At the end of the quarter, there was $1.075 billion remaining under the previous share repurchase authorizations. The company intends to spend about $500 million on repurchases in fiscal 2016. Further share repurchases will be accretive to earnings. The company estimates continued share repurchases will provide a 20 cents per share or roughly 3% tailwind to EPS.
Rockwell Automation's recent acquisition of Automation Control Products will increase its offerings in The Connected Enterprise. It is the company’s endeavor to connect information from the plant floor to the rest of the enterprise. Automation Control Products is a perfect fit for Rockwell Automation’s industrial automation offerings that aim to increase reliability, productivity and security as well as lower energy and maintenance costs. The combination will aid in implementing sustainable technology for leading global manufacturers and help meet their needs better.
However, persistent decline in oil and gas will continue to weigh on Rockwell Automation’s performance, given its exposure of roughly 12% to oil and gas. Previously, the company estimated oil and gas to plunge about 20% in fiscal 2016, though it now expects a decline of about 25% for the full year. The company noted that China remains slow as capital spending is still very constrained. The global mining industry has been noticeably sluggish due to oversupply and weak commodity prices, particularly in China and Australia.
Rockwell Automation carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include HollySys Automation Technologies, Ltd. (HOLI - Free Report) , Johnson Controls International plc (JCI - Free Report) and Alarm.Com Holdings, Inc. (ALRM - Free Report) . While HollySys Automation and Johnson Controls International sport a Zacks Rank #1 (Strong Buy), Alarm.Com Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Rockwell Automation to Gain from New Products, Risks Stay
On Sept 14, 2016, we issued an updated research report on Rockwell Automation, Inc. (ROK - Free Report) . The company is a provider of industrial automation power, control and information solutions. The company stands to benefit from its differentiated technology and domain expertise, product launches, diversification of sales streams by expansion of products portfolio and share repurchases. However, weaknesses in mining and lower oil prices remain matters of concern.
Rockwell Automation reported adjusted earnings per share of $1.55 in fiscal third-quarter 2016, down 3% year over year. Rockwell Automation revised its fiscal 2016 adjusted EPS guidance to $5.80–$6.00 from the previous range of $5.75–$6.15. The company expects revenue to shrink 7% for the full year, which includes a currency headwind of about 3% and an organic sales decline of 4%.
During the quarter, Rockwell Automation’s Control Products & Solutions segment saw a larger amount of project delays in solutions and services businesses in the U.S. The company anticipates this trend in delays to continue into fiscal fourth-quarter. Consequently, it curbed the previous projections for sales in this business for the fourth quarter as well.
Rockwell Automation expects persistent improvement in overall product sales in fiscal fourth-quarter 2016. Its differentiated technology and domain expertise will deliver positive business outcomes for customers and consistently simplifying their experience. Further, understanding fosters loyalty; combining technology and expertise increases customer share, preserves margins, and reduces cyclicality.
In fiscal 2016, Rockwell will launch an unprecedented number of new products, including the next-generation high-performance integrated control and information architecture. Even under challenging market conditions, producers and equipment builders need Rockwell Automation’s technology and expertise to achieve their business objectives. The long-term secular drivers for industrial automation and information remain intact and the company continues to enhance its competitive differentiation in order to expand the value provided to customers and gain market share.
During fiscal third-quarter 2016, Rockwell Automation repurchased 1.1 million shares at a cost of $122 million. At the end of the quarter, there was $1.075 billion remaining under the previous share repurchase authorizations. The company intends to spend about $500 million on repurchases in fiscal 2016. Further share repurchases will be accretive to earnings. The company estimates continued share repurchases will provide a 20 cents per share or roughly 3% tailwind to EPS.
Rockwell Automation's recent acquisition of Automation Control Products will increase its offerings in The Connected Enterprise. It is the company’s endeavor to connect information from the plant floor to the rest of the enterprise. Automation Control Products is a perfect fit for Rockwell Automation’s industrial automation offerings that aim to increase reliability, productivity and security as well as lower energy and maintenance costs. The combination will aid in implementing sustainable technology for leading global manufacturers and help meet their needs better.
However, persistent decline in oil and gas will continue to weigh on Rockwell Automation’s performance, given its exposure of roughly 12% to oil and gas. Previously, the company estimated oil and gas to plunge about 20% in fiscal 2016, though it now expects a decline of about 25% for the full year. The company noted that China remains slow as capital spending is still very constrained. The global mining industry has been noticeably sluggish due to oversupply and weak commodity prices, particularly in China and Australia.
Rockwell Automation carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include HollySys Automation Technologies, Ltd. (HOLI - Free Report) , Johnson Controls International plc (JCI - Free Report) and Alarm.Com Holdings, Inc. (ALRM - Free Report) . While HollySys Automation and Johnson Controls International sport a Zacks Rank #1 (Strong Buy), Alarm.Com Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>