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Growing Investment, Acquisitions Aid Rockwell Automation

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On Dec 26, we issued an updated research report on Rockwell Automation, Inc. (ROK - Free Report) . The company’s performance will be backed by favorable manufacturing environment and strength in heavy industries. Growing investment and acquisitions will also fuel growth.

Let’s illustrate these factors in detail.

Growing Investment Supports Rockwell Automation

For fiscal 2019, Rockwell Automation expects its adjusted EPS will be $8.85-$9.25, which represents 12% year-over-year growth at the mid-point. It also anticipates organic sales to be up 3.7-6.7%. Significant investments to globalize manufacturing, product development and customer-facing resources will drive Rockwell Automation’s growth.

Strength in Heavy Industries to Aid Rockwell Automation

Rockwell Automation expects heavy industries to be a primary growth driver. Growth in emerging markets and growth of the middle class will create demand for semiconductor and other heavy industries.

Favorable Manufacturing Environment to Drive Growth

Global manufacturing environment remains favorable and macroeconomic indicators are positive. PMI (Purchasing Managers' Index) remained above 50 so far this year, indicating a continued expansion in U.S. manufacturing economy. Furthermore, the Architecture Billings Index (ABI) remained above 50, which reflects improving business conditions.

Acquisitions -- Key Growth Driver

In fiscal 2018, Rockwell Automation made several investments, including a $1-billion equity investment in PTC. PTC is the leader in the Industrial Internet of Things and augmented reality. Its investment and alliance with PTC will accelerate growth for both companies. Notably, this action will help Rockwell Automation’s customers to transform their physical operations to digital technology. The company is also actively engaged in the evaluation of inorganic opportunities to accelerate the Connected Enterprise strategy.

Share Price Performance

In a year’s time, Rockwell Automation has outperformed its industry. Shares of the company have lost 25% compared with the industry’s 27% decline.



Zacks Rank & Other Stocks to Consider

Rockwell Automation currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Some other top-ranked stocks in the same sector are W.W. Grainger, Inc. (GWW - Free Report) , CECO Environmental Corp. and Northwest Pipe Company (NWPX - Free Report) . All three stocks carry a Zacks Rank #2.

Grainger has a long-term earnings growth rate of 12.4%. The stock has gained around 17% in a year’s time.

CECO has a long-term earnings growth rate of 15%. Its shares have jumped 29% in the past year.

Northwest Pipe has a long-term earnings growth rate of 10%. The company’s shares have been up 14% during the past year.

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