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Rockwell Automation (ROK) Q3 Earnings & Sales Beat Estimates

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Rockwell Automation Inc. (ROK - Free Report) reported adjusted earnings per share (EPS) of $2.66 in third-quarter fiscal 2022 (ended Jun 30, 2022), surpassing the Zacks Consensus Estimate of $2.31. The bottom line improved 15% year over year on higher sales, including price increases and strong operating performance.

Including other one-time items, earnings came in at $2.55 per share in the fiscal third quarter compared with the prior-year quarter’s $2.32 per share.

Total revenues were $1,969 million, up 6.5% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $1,9517 million. Organic sales in the quarter were up 7.1%. Acquisitions contributed 2.5% to sales growth, while currency translation had a negative impact of 3.1%. Total orders were up 17% year on year.

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

Operational Update

Cost of sales increased 7.6% year over year to around $1,166 million. Gross profit rose 5% year over year to $802 million. Selling, general and administrative expenses moved up 1.2% year over year to $442 million.

Consolidated segment operating income totaled $409 million, up 11% from the prior-year quarter. The total segment operating margin was 20.8% in the fiscal third quarter, higher than the prior-year period’s 19.9%. Gains from higher sales and lower incentive compensation were partially offset by higher investment spend.

Segment Results

Intelligent Devices: Net sales amounted to $878 million during the fiscal third quarter, down 0.5% year over year. Segment operating earnings totaled $173 million compared with the year-earlier quarter’s $194 million. Segment operating margin decreased to 19.7% in the quarter compared with the year-ago quarter’s 21.9%.

Software & Control: Net sales climbed 19% year over year to $607 million in the reported quarter. Segment operating earnings surged 48.6% year over year to $191 million. Segment operating margin was 31.4% compared with 25.2% in the year-earlier quarter.

Lifecycle Services: Net sales for the segment were $484 million in the reported quarter, up 6% year over year. Segment operating earnings totaled $45.4 million compared with the prior-year quarter’s $46.8 million. Segment operating margin was 9.4% in the reported quarter compared with the year-earlier quarter’s 10.3%.

Financials

As of the end of the third quarter of fiscal 2022, cash and cash equivalents were around $483 million compared with $662 million as of the end of fiscal 2021. Total debt was around $4.1 billion at the end of the reported quarter compared with $3.9 billion at the fiscal 2021-end.

Cash flow from operations through the nine months period ended on Jun 30, 2022, was $424 million compared with the prior-year quarter’s $1,057 million. Return on invested capital was 12.8% as of Jun 30, 2022.

During the quarter under review, ROK repurchased around 0.8 million shares for $176 million. As of the end of the quarter, $1.3 billion was available under the existing share-repurchase authorization.

Fiscal 2022 Guidance

Rockwell Automation expects strong double-digit year-over-year and sequential sales growth in the fourth quarter of fiscal 2022. It expects reported sales growth at 10.5-12.5% for fiscal 2022. The company had earlier provided a range of 11% to 15% for fiscal 2022. Organic sales growth is projected at 10-12%, down from its prior expectation of 10-14%, reflecting ongoing supply chain volatility. Adjusted earnings per share guidance for fiscal 2022 is expected between $9.30 and $9.70 compared with its prior provided range of $9.20 to $9.80.

Share Price Performance

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In the past year, Rockwell Automation’s shares have fallen 18.7% compared with the industry’s decline of 26.2%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the Industrial Products sector are Greif Inc. (GEF - Free Report) , Titan International (TWI - Free Report) and Valmont Industries (VMI - Free Report) . Both GEF and TWI sport a Zacks Rank #1 (Strong Buy), while VMI carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 12.6% in the past year.

Titan International has an estimated earnings growth rate of 165% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 43%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. TWI’s shares have soared 102.7% in a year.

Valmont Industries has an expected earnings growth rate of around 27% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4% in the past 60 days.

Valmont Industries has a trailing four-quarter earnings surprise of 13.7%, on average. VMI’s shares have gained 10% in the past year.

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