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Shares of Rockwell Automation, Inc. (ROK - Free Report) scaled a new 52-week high of $317.67 on Jun 14 before closing the session a tad lower at $313.12. This came following the announcement of Rockwell Automation extending its partnership with Boston, MA-based PTC Inc. (PTC - Free Report) on Jun 8.
ROK currently has a market capitalization of $36.2 billion and a Zacks Rank #2 (Buy).
In the past year, Rockwell Automation’s shares have gained 52.2%, compared with the industry’s 48.5% growth.
Image Source: Zacks Investment Research
Let’s delve deeper and analyze the factors aiding the stock.
Strong Order Levels: Rockwell Automation’s order levels have been improving over the past few quarters and have been outpacing shipments. Also, low order cancellation rates indicate the solid underlying demand from customers across several industries and regions.
Huge capital investments across various end markets coupled with higher automation and digital transformation will continue to support solid order levels across all segments.
Upbeat Fiscal 2023 Outlook: Backed by solid backlog levels and performance in the first half of fiscal 2023, as well as improvement in the availability of electronic components, Rockwell Automation expects reported sales growth to be within 12.5-16.5% for fiscal 2023.
The organic growth sales guidance for fiscal 2023 is 13-17%. Improved price realization and higher sales volume will aid revenues in the fiscal year.
Adjusted earnings per share for fiscal 2023 are expected between $11.50 and $12.20. The midpoint of the guidance indicates growth of 25% from the adjusted earnings per share of $9.49 reported in fiscal 2022.
Impressive Strategic Actions: The company continues to benefit from price increase actions to mitigate the impacts of inflationary pressures, which are likely to improve the margin.
Also, the company is investing in capacity ($500 million per quarter) as well as in technology and people to increase supply-chain resiliency and support growth.
Improving Balance Sheet: Rockwell Automation maintains a strong financial position with regard to capital structure, cost-containment actions and liquidity, while also being well-positioned to sail through the current turbulent situation.
The company’s total debt-to-total capital ratio has been declining over the past few quarters and was 0.50 at the end of the second quarter of fiscal 2023.
In the second quarter of fiscal 2023, the company spent $0.2 million on share repurchases. As of the end of the quarter, $1.1 billion remained available under the existing share repurchase authorization.
Recent Investments: Rockwell Automation is well-poised to benefit from the broadening of its hardware and software products portfolio, solutions and services. It is also gaining traction from investments in the cloud.
Significant investments to globalize manufacturing, product development, building channel capability and partner network will drive growth.
Recently, ROK announced a partnership extension with PTC. The partnership will focus on the use of the Internet of Things and augmented reality software by manufacturing companies.
Under this partnership, customers will gain from the resources, technology and industry expertise of both companies.
Upward Estimate Revisions: Earnings estimates for Rockwell Automation have been going up over the past two months. The Zacks Consensus Estimate for the fiscal 2023 bottom line has increased 7.4% and the same for fiscal 2024 has moved up 6.9%. The consensus estimate for fiscal third-quarter 2023 earnings has also been revised 8% upward over the same time frame.
The favorable estimate revisions instill investors’ confidence in the stock.
Hubbell has an average trailing four-quarter earnings surprise of 21%. The Zacks Consensus Estimate for HUBB’s fiscal 2023 earnings is pegged at $13.81 per share. The consensus estimate for 2023 earnings has moved 22.5% north in the past 60 days. Its shares have gained 82.3% in the last year.
The Zacks Consensus Estimate for AptarGroup’s 2023 earnings per share is pegged at $4.15, up 7.5% in the past 60 days. It has a trailing four-quarter average earnings surprise of 6.4%. ATR has gained 21.5% in the last year.
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Rockwell Automation (ROK) Hits 52-Week High: What's Driving It?
Shares of Rockwell Automation, Inc. (ROK - Free Report) scaled a new 52-week high of $317.67 on Jun 14 before closing the session a tad lower at $313.12. This came following the announcement of Rockwell Automation extending its partnership with Boston, MA-based PTC Inc. (PTC - Free Report) on Jun 8.
ROK currently has a market capitalization of $36.2 billion and a Zacks Rank #2 (Buy).
In the past year, Rockwell Automation’s shares have gained 52.2%, compared with the industry’s 48.5% growth.
Image Source: Zacks Investment Research
Let’s delve deeper and analyze the factors aiding the stock.
Strong Order Levels: Rockwell Automation’s order levels have been improving over the past few quarters and have been outpacing shipments. Also, low order cancellation rates indicate the solid underlying demand from customers across several industries and regions.
Huge capital investments across various end markets coupled with higher automation and digital transformation will continue to support solid order levels across all segments.
Upbeat Fiscal 2023 Outlook: Backed by solid backlog levels and performance in the first half of fiscal 2023, as well as improvement in the availability of electronic components, Rockwell Automation expects reported sales growth to be within 12.5-16.5% for fiscal 2023.
The organic growth sales guidance for fiscal 2023 is 13-17%. Improved price realization and higher sales volume will aid revenues in the fiscal year.
Adjusted earnings per share for fiscal 2023 are expected between $11.50 and $12.20. The midpoint of the guidance indicates growth of 25% from the adjusted earnings per share of $9.49 reported in fiscal 2022.
Impressive Strategic Actions: The company continues to benefit from price increase actions to mitigate the impacts of inflationary pressures, which are likely to improve the margin.
Also, the company is investing in capacity ($500 million per quarter) as well as in technology and people to increase supply-chain resiliency and support growth.
Improving Balance Sheet: Rockwell Automation maintains a strong financial position with regard to capital structure, cost-containment actions and liquidity, while also being well-positioned to sail through the current turbulent situation.
The company’s total debt-to-total capital ratio has been declining over the past few quarters and was 0.50 at the end of the second quarter of fiscal 2023.
In the second quarter of fiscal 2023, the company spent $0.2 million on share repurchases. As of the end of the quarter, $1.1 billion remained available under the existing share repurchase authorization.
Recent Investments: Rockwell Automation is well-poised to benefit from the broadening of its hardware and software products portfolio, solutions and services. It is also gaining traction from investments in the cloud.
Significant investments to globalize manufacturing, product development, building channel capability and partner network will drive growth.
Recently, ROK announced a partnership extension with PTC. The partnership will focus on the use of the Internet of Things and augmented reality software by manufacturing companies.
Under this partnership, customers will gain from the resources, technology and industry expertise of both companies.
Upward Estimate Revisions: Earnings estimates for Rockwell Automation have been going up over the past two months. The Zacks Consensus Estimate for the fiscal 2023 bottom line has increased 7.4% and the same for fiscal 2024 has moved up 6.9%. The consensus estimate for fiscal third-quarter 2023 earnings has also been revised 8% upward over the same time frame.
The favorable estimate revisions instill investors’ confidence in the stock.
Other Key Picks
Some other top-ranked stocks from the Industrial Products sector are Hubbell Incorporated (HUBB - Free Report) and AptarGroup, Inc. (ATR - Free Report) . HUBB sports a Zacks Rank #1 (Strong Buy) at present and ATR carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hubbell has an average trailing four-quarter earnings surprise of 21%. The Zacks Consensus Estimate for HUBB’s fiscal 2023 earnings is pegged at $13.81 per share. The consensus estimate for 2023 earnings has moved 22.5% north in the past 60 days. Its shares have gained 82.3% in the last year.
The Zacks Consensus Estimate for AptarGroup’s 2023 earnings per share is pegged at $4.15, up 7.5% in the past 60 days. It has a trailing four-quarter average earnings surprise of 6.4%. ATR has gained 21.5% in the last year.