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Should Rockwell Automation (ROK) Stock Be In Your Portfolio?
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Rockwell Automation Inc. (ROK - Free Report) has been performing well of late and clocked a return of 34.4% in 2016. Rockwell Automation, with market capitalization of $19.44 billion is an original equipment manufacturer (OEM) of industrial automation equipment, application specific integrated software and consulting design services. The Zacks Rank #1 (Strong Buy) stock also has a long-term expected earnings growth rate of 7.57%. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Strong Q1 Performance
Rockwell Automation’s both top-line and bottom-line registered year-over-year growth in fiscal first-quarter 2017, surpassing the Zacks Consensus Estimate on both counts. Better-than-expected earnings were driven by higher sales, strong margin performance and lower tax rates.
Further, in the quarter, Rockwell Automation witnessed a return to positive organic growth in its largest market – the U.S. with organic growth of 1.8%, after four consecutive quarters of organic declines. Emerging markets registered double-digit growth, led by Asia Pacific (particularly India and China). Consumer and transportation verticals continued to be strong.
Upbeat Guidance
Given the strong performance as well as an improving macro outlook, Rockwell Automation increased fiscal 2017 adjusted EPS guidance range to the range of $5.95–$6.35 per share and sales growth to be in the range of 1–5%. Further, the company expects continued growth in the consumer and transportation verticals while heavy industry end markets will remain almost flat year over year.
Positive Earnings Surprise History
Rockwell Automation has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 8.16%.
The company’s estimates for second-quarter fiscal 2017 and fiscal 2017, have moved north in the past 30 days, reflecting the positive outlook of analysts on the stock. For the quarter, estimates have inched up 1% to the current level of $1.39 per share in the past 30 days. For fiscal 2017, the Zacks Consensus Estimate has moved up 2% to $6.26 per share.
Price Performance
Rockwell Automation's shares have outperformed the Zacks categorized Industrial Automation/Robotics sub industry in the past one year.
The company’s share price has surged 48.7% in the last one year, while the subindustry witnessed an increase of 32.2% in the same time frame.
Growth Prospects
Rockwell Automation continues to target long-term revenue growth of 6–8% and double-digit EPS growth, return on invested capital (ROIC) of more than 20% over the long term and cash flow of around 100% of adjusted income. These long-term goals will be supported by Rockwell Automation’s strategy of diversifying sales streams by way of expanding products portfolio, solutions and services, and global presence.
Moreover, the company aims to achieve growth rates in excess of the automation market by expanding served market, strengthening competitive differentiation, and serving a wider range of industries and applications. Rockwell Automation’s objectives also include market share growth by gaining new customers and capturing a larger share of existing customer spending, improving quality and customer experience. Further, the company plans to enhance market access by building channel capacity and partner network.
Rockwell Automation’s new Connected Enterprise (CE) integrated supply chain management system will be a growth driver. With average profitability well above the corporate average, CE sales will be an integral part of Rockwell’s incremental growth and help boost margins over the next few years.
Kennametal has delivered an average positive earnings surprise of 9.90% in the last four quarters. Kennametal shares have soared 92.2% in the past one year. Roper Technologies has delivered an average positive earnings surprise of 0.92% in the trailing four quarters and its shares have gained 26% in the past one year period. II-VI Incorporated has an average positive earnings surprise of 59.23% in the past four quarters. Its shares have gained 72.6% in the past one year.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
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Should Rockwell Automation (ROK) Stock Be In Your Portfolio?
Rockwell Automation Inc. (ROK - Free Report) has been performing well of late and clocked a return of 34.4% in 2016. Rockwell Automation, with market capitalization of $19.44 billion is an original equipment manufacturer (OEM) of industrial automation equipment, application specific integrated software and consulting design services. The Zacks Rank #1 (Strong Buy) stock also has a long-term expected earnings growth rate of 7.57%. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Strong Q1 Performance
Rockwell Automation’s both top-line and bottom-line registered year-over-year growth in fiscal first-quarter 2017, surpassing the Zacks Consensus Estimate on both counts. Better-than-expected earnings were driven by higher sales, strong margin performance and lower tax rates.
Further, in the quarter, Rockwell Automation witnessed a return to positive organic growth in its largest market – the U.S. with organic growth of 1.8%, after four consecutive quarters of organic declines. Emerging markets registered double-digit growth, led by Asia Pacific (particularly India and China). Consumer and transportation verticals continued to be strong.
Upbeat Guidance
Given the strong performance as well as an improving macro outlook, Rockwell Automation increased fiscal 2017 adjusted EPS guidance range to the range of $5.95–$6.35 per share and sales growth to be in the range of 1–5%. Further, the company expects continued growth in the consumer and transportation verticals while heavy industry end markets will remain almost flat year over year.
Positive Earnings Surprise History
Rockwell Automation has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 8.16%.
Rockwell Automation, Inc. Price and EPS Surprise
Rockwell Automation, Inc. Price and EPS Surprise | Rockwell Automation, Inc. Quote
Estimates Moving Up
The company’s estimates for second-quarter fiscal 2017 and fiscal 2017, have moved north in the past 30 days, reflecting the positive outlook of analysts on the stock. For the quarter, estimates have inched up 1% to the current level of $1.39 per share in the past 30 days. For fiscal 2017, the Zacks Consensus Estimate has moved up 2% to $6.26 per share.
Price Performance
Rockwell Automation's shares have outperformed the Zacks categorized Industrial Automation/Robotics sub industry in the past one year.
The company’s share price has surged 48.7% in the last one year, while the subindustry witnessed an increase of 32.2% in the same time frame.
Growth Prospects
Rockwell Automation continues to target long-term revenue growth of 6–8% and double-digit EPS growth, return on invested capital (ROIC) of more than 20% over the long term and cash flow of around 100% of adjusted income. These long-term goals will be supported by Rockwell Automation’s strategy of diversifying sales streams by way of expanding products portfolio, solutions and services, and global presence.
Moreover, the company aims to achieve growth rates in excess of the automation market by expanding served market, strengthening competitive differentiation, and serving a wider range of industries and applications. Rockwell Automation’s objectives also include market share growth by gaining new customers and capturing a larger share of existing customer spending, improving quality and customer experience. Further, the company plans to enhance market access by building channel capacity and partner network.
Rockwell Automation’s new Connected Enterprise (CE) integrated supply chain management system will be a growth driver. With average profitability well above the corporate average, CE sales will be an integral part of Rockwell’s incremental growth and help boost margins over the next few years.
Other Stocks to Consider
Some other favourable stocks worth considering in the industrial products sector include Kennametal Inc. (KMT - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and II-VI Incorporated . All of these stocks sport the same rank as Rockwell Automation. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kennametal has delivered an average positive earnings surprise of 9.90% in the last four quarters. Kennametal shares have soared 92.2% in the past one year. Roper Technologies has delivered an average positive earnings surprise of 0.92% in the trailing four quarters and its shares have gained 26% in the past one year period. II-VI Incorporated has an average positive earnings surprise of 59.23% in the past four quarters. Its shares have gained 72.6% in the past one year.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>