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Rockwell Automation (ROK) Beats Q3 Earnings, Hikes Outlook
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Rockwell Automation Inc. (ROK - Free Report) delivered adjusted earnings per share of $2.16 in third-quarter fiscal 2018 (ended Jun 30, 2018), up 23% from the prior-year quarter figure of $1.76. The year-over-year performance was driven by elevated sales. Earnings also surpassed the Zacks Consensus Estimate of $2.03.
Including one-time items, the company reported earnings of $1.587 per share, compared with earnings of $1.67 per share in the year-ago quarter.
Total revenues came in at $1,699 million in the quarter, up 6% year over year but came in line with the Zacks Consensus Estimate. Organic sales rose 5.7%. Foreign currency translations bolstered sales by 1.8%, while divestitures in the prior year reduced sales by 1.3%.
Rockwell Automation, Inc. Price, Consensus and EPS Surprise
Cost of sales increased 4% year over year to $957 million. Gross profit went up 9% to $742 million from $678 million reported in the year-ago quarter. Selling, general and administrative expenses increased 4% to $402 million.
Consolidated segment operating income was $383 million, up 14% from $337 million recorded in the prior-year quarter. Segment operating margin was 22.5% in the reported quarter, an expansion of 140 bps from the year-earlier quarter due to higher sales.
Segment Results
Architecture & Software: Net sales rose 9% year over year to $7968 million in the third quarter. Organic sales were up 6.7% and currency translation bolstered sales by 2%. Segment operating earnings were $2398 million compared with $204 million recorded in the prior year. Segment operating margin was 30.0% compared with 27.9% witnessed in the year-ago quarter.
Control Products & Solutions: Net sales climbed 4% to $903 million in the reported quarter. Organic sales increased 4.9%, currency translation improved sales by 1.6%, and the prior-year divestiture reduced sales by 2.4%. Segment operating earnings increased 8% to $144 million from $133 million in the year-ago quarter. Segment operating margin came in at 15.9% compared with 15.3% recorded in the prior-year quarter.
Financials
As of Jun 30, 2018, cash and cash equivalents were $940 million, down from $1,411 million as of Sep 30, 2017. As of Jun 30, 2018, total debt was $1,228 million, down from $1,844 million as of Sep 30, 2017.
Cash flow from operations came in at $937 million in the nine-month period ended Jun 30, 2018 compared with $927 million in the year-ago quarter. Return on invested capital was 43.8% as of Jun 30, 2018, up from 38.8% as of Jun 30, 2017.
During the fiscal third quarter, Rockwell Automation repurchased 2.5 million shares for $431 million. As of Jun 30, 2018, $5048 million remained available for repurchase.
Guidance
Backed by favorable global manufacturing environment, positive macroeconomic indicators growing backlog, Rockwell Automation raised adjusted EPS guidance to $7.90-$8.10 from the prior $7.70-$8.00. It also hiked fiscal 2018 organic sales growth guidance to about 5.5% and projects fiscal 2018 reported sales to be about $6.7 billion.
Share Price Performance
Rockwell Automation's shares have outperformed the industry in the past year. The company’s shares have appreciated 4.5%, while the industry inched up 1%.
Zacks Rank & Other Stocks to Consider
Rockwell Automation carries a Zacks Rank #2 (Buy).
Actuant has a long-term earnings growth rate of 15.6%. Its shares have rallied around 12% in the past year.
Grainger has a long-term earnings growth rate of 12.5%. The company’s shares have been up 99% in the past year.
DMC Global has a long-term earnings growth rate of 20%. The company’s shares have soared 267% in a year’s time.
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Rockwell Automation (ROK) Beats Q3 Earnings, Hikes Outlook
Rockwell Automation, Inc. price-consensus-eps-surprise-chart | Rockwell Automation, Inc. Quote
Operational Update
Cost of sales increased 4% year over year to $957 million. Gross profit went up 9% to $742 million from $678 million reported in the year-ago quarter. Selling, general and administrative expenses increased 4% to $402 million.
Consolidated segment operating income was $383 million, up 14% from $337 million recorded in the prior-year quarter. Segment operating margin was 22.5% in the reported quarter, an expansion of 140 bps from the year-earlier quarter due to higher sales.
Segment Results
Architecture & Software: Net sales rose 9% year over year to $7968 million in the third quarter. Organic sales were up 6.7% and currency translation bolstered sales by 2%. Segment operating earnings were $2398 million compared with $204 million recorded in the prior year. Segment operating margin was 30.0% compared with 27.9% witnessed in the year-ago quarter.
Control Products & Solutions: Net sales climbed 4% to $903 million in the reported quarter. Organic sales increased 4.9%, currency translation improved sales by 1.6%, and the prior-year divestiture reduced sales by 2.4%. Segment operating earnings increased 8% to $144 million from $133 million in the year-ago quarter. Segment operating margin came in at 15.9% compared with 15.3% recorded in the prior-year quarter.