Rockwell Automation Inc.
(ROK - Free Report
) is performing well on the back of favorable manufacturing environment, ongoing strength in heavy industries and positive impact of the tax reform. Also, its impressive price performance and strong fundamentals instill investors’ confidence in the stock. Therefore, it’s time you take advantage of the stock price appreciation.
What Makes Rockwell Automation an Attractive Pick
: In the past year, Rockwell Automation’s shares have gained 10.2% compared with the industry
’s increase of 14.6%.
Bullish Zacks Rank, Score: Rockwell Automation carries a Zacks Rank #2 (Buy).
It has a VGM score
of A. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. In fact, our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 make solid investment choices.
Solid Estimate Revisions
Estimates for Rockwell Automation have moved up over the past 60 days, reflecting the optimistic outlook of analysts. The consensus mark for both fiscal 2018 and fiscal 2019 advanced 1% to $7.88 and $8.83, respectively. While the Zacks Consensus Estimate for fiscal 2018 reflects year-over-year growth 16.6%, the same for fiscal 2019 the projects year-over-year increase of 12%.
Moreover, the company has an estimated long-term earnings growth rate of 12.6%.
Positive Earnings Surprise History
Rockwell Automation outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 5.64%.
Rockwell Automation’s adjusted EPS guidance is at $7.70-$8.00 for fiscal 2018. At the mid-point, the new guidance range represents 16% year-over-year growth. The company projects sales growth at 4.5-7.5% and organic sales growth at 3.5-6.5% for the year.
Heavy industries will be the largest growth driver for Rockwell Automation, followed by consumer vertical. Further, lower tax rates would translate into improved earnings for the company and provide it with greater flexibility to deploy cash. Also, the impact of the tax reform on customers' investment decisions might benefit the company’s future performance. Global manufacturing environment remains favorable and macroeconomic indicators are positive.
To boost growth and other long-term objectives, Rockwell Automation will increase investments in fiscal 2018. These efforts include accelerated software development and commercial resources to fuel growth of its Information Solutions and Connective Services offering. Additionally, the company increased investments to expand Process capabilities in order to accelerate growth. Rockwell Automation is also actively engaged in the evaluation of inorganic opportunities to accelerate the Connected Enterprise strategy. Meanwhile, the company will look for strategic acquisitions.
Other Stocks to Consider
Axon Enterprise has a long-term earnings growth rate of 25%. Its shares have appreciated 161% over the past year.
Caterpillar has a long-term earnings growth rate of 13.3%. The company’s shares have been up 48% in the past year.
Terex has a long-term earnings growth rate of 21%. The stock has gained 15% in a year’s time.
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