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Rockwell Automation (ROK) Q2 Earnings & Sales Miss Estimates

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Rockwell Automation Inc. (ROK - Free Report) reported adjusted earnings per share (EPS) of $1.66 in second-quarter fiscal 2022 (ended Mar 31, 2022), missing the Zacks Consensus Estimate of $2.27. Compared with earnings of $2.41 reported in the year-ago quarter, the bottom line declined 31% year over year due to higher input costs and higher investment expenses, partly offset by lower incentive compensation and improved price realization.

Including other one-time items, earnings came in at 46 cents per share in the fiscal second quarter compared with the prior-year quarter’s $3.54 per share.

Total revenues were $1,808 million, up 2% from the prior-year quarter. The top line missed the Zacks Consensus Estimate of $1,947 million. Organic sales in the quarter were up 1.3%. Acquisitions contributed 2.3% to sales growth, while currency translation had a negative impact of 1.8%. Total orders were up 37% year on year.

Operational Update

Cost of sales increased 13% year over year to around $1,144 million. Gross profit fell 13% year over year to $664 million. Selling, general and administrative expenses moved up 1.7% year over year to $429 million.

Consolidated segment operating income totaled $283 million, down 27% from the prior-year quarter. The total segment operating margin was 15.7% in the fiscal second quarter, lower than the prior-year period’s 22%.

Rockwell Automation, Inc. Price, Consensus and EPS Surprise

 

Rockwell Automation, Inc. Price, Consensus and EPS Surprise

Rockwell Automation, Inc. price-consensus-eps-surprise-chart | Rockwell Automation, Inc. Quote

 

Segment Results

Intelligent Devices: Net sales amounted to $809 million during the fiscal second quarter, down 5% year over year. Segment operating earnings totaled $118 million compared with the year-earlier quarter’s $202 million. Segment operating margin decreased to 14.6% in the quarter compared with the year-ago quarter’s 23.8%.

Software & Control: Net sales climbed 6.5% year over year to $535 million in the reported quarter. Segment operating earnings dropped 1.4% year over year to $132 million. Segment operating margin was 24.6% compared with 29.8% in the year-earlier quarter.

Lifecycle Services: Net sales for the segment were $465 million in the reported quarter, up 9.7% year over year. Segment operating earnings totaled $33.7 million compared with the prior-year quarter’s $38.3 million. Segment operating margin was 7.3% in the reported quarter compared with the year-earlier quarter’s 9%.

Financials

As of the end of the second quarter of fiscal 2022, cash and cash equivalents were around $443 million compared with $662 million as of the end of fiscal 2021. Total debt was around $4.1 billion at the end of the fiscal second quarter compared with $3.9 billion at the fiscal 2021-end.

Cash flow from operations as of the six months period ended on Mar 31, 2022, was $79 million compared with the prior-year quarter’s $595 million. Return on invested capital was 13.2% as of Mar 31, 2022.

During the quarter under review, there were no share repurchases. As of the end of the quarter, $503 million was available under the existing share-repurchase authorization. Recently, the company’s board authorized an additional $1 billion for share repurchase.

Fiscal 2022 Guidance

Reflecting strong demand and record backlog, Rockwell Automation expects reported sales growth at 11-15% for fiscal 2022. Organic sales growth is projected at 10-14%. Adjusted earnings per share guidance for fiscal 2022 is expected to be $9.20-$9.80.

Share Price Performance

In the past year, Rockwell Automation’s shares have declined 4.8% compared with the industry’s loss of 7.4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Rockwell Automation currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Alcoa (AA - Free Report) , Packaging Corporation of America (PKG - Free Report) and Titan International (TWI - Free Report) . All of these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa has a projected earnings growth rate of 107% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 76% in the past 60 days.

Alcoa delivered a trailing four-quarter earnings surprise of 17.4% on average. Alcoa’s shares have surged 69.3% in the past year.

Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4.2% in the past 60 days.

PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 5.4% in the past year.

Titan International has an estimated earnings growth rate of 36.5% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 20%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have appreciated 23.3% in a year’s time.