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Rockwell Automation, Inc. (ROK - Free Report) reported adjusted earnings per share of $1.52 in fourth-quarter fiscal 2016 (ended Sep 30, 2016), down 3% from $1.57 earned in the prior-year quarter. However, earnings outpaced the Zacks Consensus Estimate of $1.49 and recorded a positive earnings surprise of 6%.
Including one-time items, the company’s earnings came in at $1.43 per share, down 4.7% from the year-ago quarter figure of $1.50.
For the fiscal 2016, adjusted earnings came in at $5.93 per share down 7% from $$6.40 in fiscal 2015. Including one-time items, the company’s earnings came in at $5.56 per share, compared with $6.09 in fiscal 2015.
Total revenue was $1,538.6 million in the quarter, declining 4.3% year over year but surpassed the Zacks Consensus Estimate of $1,514 million. Organic sales fell 4%, acquisitions contributed 0.4% while unfavorable foreign currency translations had an impact of 0.7%.
For fiscal 2016, revenues slumped 6.8% year over year to $5,879.5 million.
Cost of sales dropped 6% year over year to $886.7 million. Gross profit dipped 1.9% to $651.9 million from $664.2 million in the year-ago quarter. Selling, general and administrative expenses increased 11.5% to $402.1 million. Consolidated segment operating income was $304.3 million, down 9.4% from $335.8 million in the prior-year quarter.
Segment Results
Architecture & Software: Net sales inched up 1.8% year over year to $696.4 million in fourth-quarter. Organic sales increased 1.4%, acquisitions contributed 1% while currency translations hurt sales by 0.6%. Segment operating earnings were $180 million, compared with $186.5 million a year ago. Operating margin contracted 150 basis points (bps) to 25.8% from 27.3% a year ago, primarily due to unfavorable mix and higher restructuring charges.
Control Products & Solutions: Net sales fell 8.8% to $842.2 million in the reported quarter. Organic sales declined 8%, while currency translations dented sales by 0.8%. Segment operating earnings dropped 16.7% to $124.3 million from $149.3 million in the year-ago quarter. Operating margin decreased 140 bps to 14.8%.
Financials
As of Sep 30, 2016, cash and cash equivalents were $1,526.4 million, up from $1,427.3 million as of Sep 30, 2015. As of Sep 30, 2016, long-term debt was $1,516.3 million, up from $1,500.9 million as of Sep 30, 2015.
Cash flow from operations for fiscal 2016 came in at $947.3 million compared with $1,187.7 million in the comparable year-ago period. Return on invested capital was 33% as of Sep 30, 2016, increasing from 32.6% in the year-ago quarter.
During the reported quarter, Rockwell Automation repurchased 1.1 million of its shares for $130.1 million. As of Sep 30, 2016, $945 million was available under the existing share repurchase authorization.
Guidance
Rockwell Automation witnessed strong sequential growth in its product businesses over the last two quarters and the company expects this momentum to continue in fiscal 2017 as well. The company anticipates heavy industries to be about flat year over year, with continued growth in its automotive and consumer verticals.
For 2017, the company expects adjusted EPS in the range of $5.85 to $6.25 per share. The company forecasts reported sales growth to be in the range of 1% to 5%.
The company acquired three companies during fiscal 2016. These acquisitions further strengthen its technology differentiation, increase the domain expertise, expand market access, and will contribute to revenue growth in fiscal 2017. The company will continue to invest in technology and domain expertise to expand the value it provides to its customers.
AO Smith, which carries a Zacks Rank #2 (Buy), has an expected earnings growth rate of 1% for the current year.
Avery Dennison, another Zacks Rank #2 stock, has an expected earnings growth rate of 15.2% for the current year.
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Rockwell Automation (ROK) Beats Q4 Earnings Estimates
Rockwell Automation, Inc. (ROK - Free Report) reported adjusted earnings per share of $1.52 in fourth-quarter fiscal 2016 (ended Sep 30, 2016), down 3% from $1.57 earned in the prior-year quarter. However, earnings outpaced the Zacks Consensus Estimate of $1.49 and recorded a positive earnings surprise of 6%.
Including one-time items, the company’s earnings came in at $1.43 per share, down 4.7% from the year-ago quarter figure of $1.50.
For the fiscal 2016, adjusted earnings came in at $5.93 per share down 7% from $$6.40 in fiscal 2015. Including one-time items, the company’s earnings came in at $5.56 per share, compared with $6.09 in fiscal 2015.
Total revenue was $1,538.6 million in the quarter, declining 4.3% year over year but surpassed the Zacks Consensus Estimate of $1,514 million. Organic sales fell 4%, acquisitions contributed 0.4% while unfavorable foreign currency translations had an impact of 0.7%.
For fiscal 2016, revenues slumped 6.8% year over year to $5,879.5 million.
Operational Update
Cost of sales dropped 6% year over year to $886.7 million. Gross profit dipped 1.9% to $651.9 million from $664.2 million in the year-ago quarter.
Selling, general and administrative expenses increased 11.5% to $402.1 million. Consolidated segment operating income was $304.3 million, down 9.4% from $335.8 million in the prior-year quarter.
Segment Results
Architecture & Software: Net sales inched up 1.8% year over year to $696.4 million in fourth-quarter. Organic sales increased 1.4%, acquisitions contributed 1% while currency translations hurt sales by 0.6%. Segment operating earnings were $180 million, compared with $186.5 million a year ago. Operating margin contracted 150 basis points (bps) to 25.8% from 27.3% a year ago, primarily due to unfavorable mix and higher restructuring charges.
Control Products & Solutions: Net sales fell 8.8% to $842.2 million in the reported quarter. Organic sales declined 8%, while currency translations dented sales by 0.8%. Segment operating earnings dropped 16.7% to $124.3 million from $149.3 million in the year-ago quarter. Operating margin decreased 140 bps to 14.8%.
Financials
As of Sep 30, 2016, cash and cash equivalents were $1,526.4 million, up from $1,427.3 million as of Sep 30, 2015. As of Sep 30, 2016, long-term debt was $1,516.3 million, up from $1,500.9 million as of Sep 30, 2015.
Cash flow from operations for fiscal 2016 came in at $947.3 million compared with $1,187.7 million in the comparable year-ago period. Return on invested capital was 33% as of Sep 30, 2016, increasing from 32.6% in the year-ago quarter.
During the reported quarter, Rockwell Automation repurchased 1.1 million of its shares for $130.1 million. As of Sep 30, 2016, $945 million was available under the existing share repurchase authorization.
Guidance
Rockwell Automation witnessed strong sequential growth in its product businesses over the last two quarters and the company expects this momentum to continue in fiscal 2017 as well. The company anticipates heavy industries to be about flat year over year, with continued growth in its automotive and consumer verticals.
For 2017, the company expects adjusted EPS in the range of $5.85 to $6.25 per share. The company forecasts reported sales growth to be in the range of 1% to 5%.
The company acquired three companies during fiscal 2016. These acquisitions further strengthen its technology differentiation, increase the domain expertise, expand market access, and will contribute to revenue growth in fiscal 2017. The company will continue to invest in technology and domain expertise to expand the value it provides to its customers.
ROCKWELL AUTOMT Price, Consensus and EPS Surprise
ROCKWELL AUTOMT Price, Consensus and EPS Surprise | ROCKWELL AUTOMT Quote
Zacks Rank & Key Picks
Currently, Rockwell carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the sector include ACCO Brands Corp. (ACCO - Free Report) , AO Smith Corp. (AOS - Free Report) and Avery Dennison Corp. (AVY - Free Report) .
ACCO Brands sports a Zacks Rank #1 (Strong Buy) and has an expected earnings growth rate of 9% for the current year. You can see the complete list of today’s Zacks #1 Rank stocks here.
AO Smith, which carries a Zacks Rank #2 (Buy), has an expected earnings growth rate of 1% for the current year.
Avery Dennison, another Zacks Rank #2 stock, has an expected earnings growth rate of 15.2% for the current year.
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>>