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Rockwell Automation (ROK) Q2 Earnings: What to Expect?

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Rockwell Automation, Inc. (ROK - Free Report) is scheduled to report second-quarter fiscal 2017 results on Apr 26, before the opening bell.

In the last reported quarter, the company’s top-line and bottom-line registered year-over-year growth, surpassing the Zacks Consensus Estimate on both counts.

Let’s see how things are shaping up prior to the first-quarter announcement.

Price Performance

Rockwell Automation's shares have outperformed the Zacks categorized Industrial Automation/Robotics sub industry. The company’s share price has advanced 7% in the last three months, while the subindustry witnessed a gain of 5.9%.

Earnings Whispers

Our proven model does not conclusively show that Rockwell Automation is likely to beat on earnings 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 this to happen. That is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Rockwell Automation currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are valued at $1.40.

Zacks Rank: Rockwell Automation carries a Zacks Rank #2. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Surprise History

The company has an impressive earnings surprise history given that it has beaten the Zacks Consensus Estimate in the trailing four quarters.

In the last reported quarter, the company posted a positive earnings surprise of 20.69% and has delivered a positive earnings surprise of 8.16% on an average in the last four quarters.

Factors at Play

In first-quarter fiscal 2017, Rockwell Automation witnessed a return to positive organic growth in its largest market – the U.S. after four consecutive quarters of organic declines. Emerging markets registered double-digit growth, led by Asia Pacific (particularly India and China). Consumer and transportation verticals continued to be strong. The company expects the momentum to continue. Further, recent projections signal improving GDP and industrial production growth rates, as well as a higher level of capital expenditures.

However, the global mining industry has been noticeably sluggish owing to oversupply and weak commodity prices. Continued weakness in the mining industry and lack of major projects will continue to affect the company’s results in the quarter. Moreover, unfavorable currency translation also remains a headwind.

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:

Deere & Company (DE - Free Report) has an Earnings ESP of +5.03% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO Corporation (AGCO - Free Report) has an Earnings ESP of +5.88% and carries a Zacks Rank #2.

Avery Dennison Corporation (AVY - Free Report) has an Earnings ESP of +2.89% and a Zacks Rank #2.

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