Back to top

Rockwell Automation (ROK) Q4 Earnings: What's in the Cards?

Read MoreHide Full Article

Rockwell Automation, Inc. (ROK - Free Report) is scheduled to report fourth-quarter fiscal 2016 results on Nov 7, before the opening bell. In the last reported quarter, Rockwell Automation’s both top and bottom line declined year over year. Let’s see how things are shaping up prior to the fourth quarter announcement.

Earnings Whispers

Our proven model does not conclusively show that Rockwell Automation will be able to pull a surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. That is not the case here as you will see below.

Zacks ESP: Rockwell Automation’s Earnings ESP stands at -0.67%. This is because the company’s Most Accurate estimate is $1.48, whereas the Zacks Consensus Estimate is pegged higher at $1.49. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Rockwell Automation currently has a Zacks Rank #4 (Sell). As it is, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

The combination of Rockwell Automation’s Zacks Rank #4 combined with a negative Earnings ESP makes an earnings beat unlikely this quarter.

Surprise History

In the last reported quarter, the company posted a positive earnings surprise of 6.16%. Notably, Rockwell Automation has delivered a positive earnings surprise of 2.34% on an average over the last four quarters.

ROCKWELL AUTOMT Price and EPS Surprise


Factors at Play

The company saw a larger amount of project delays in solutions and services businesses in fiscal third-quarter 2016, particularly in the U.S. This trend in delays is expected to continue in fiscal fourth-quarter as well. Rockwell Automation anticipates fiscal 2016 adjusted earnings per share to lie within $5.80 to $6.00. The company expects revenue to shrink 7% for the full year, which includes a currency headwind of about 3% and an organic sales decline of 4%.

The global mining industry has been noticeably sluggish due to oversupply and weak commodity prices, particularly in China and Australia. Continued weakness in the mining industry and lack of major projects will continue to affect Rockwell Automation’s results in the coming quarters. Moreover, unfavorable currency translation, project delays and choppy oil prices remain headwinds.

Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Casella Waste Systems Inc. (CWST - Free Report) has an Earnings ESP of +60.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tetra Tech, Inc. (TTEK - Free Report) has an Earnings ESP of +3.39% and a Zacks Rank #2.

NN Inc. (NNBR - Free Report) has an Earnings ESP of +4.35% and a Zacks Rank #3.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

More from Zacks Analyst Blog

You May Like