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Rockwell Automation (ROK) Q3 Earnings: What's in the Offing?

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Rockwell Automation Inc. (ROK - Free Report) is scheduled to report third-quarter fiscal 2018 results before the opening bell on Jul 25. In the last reported quarter, Rockwell Automation delivered earnings of $1.89 per share that beat the Zacks Consensus Estimate by 5%. The figure also increased 22% year over year. The year-over-year performance was driven by elevated sales. The company’s earnings have surpassed estimates in three of the trailing four quarters, recording an average positive earnings surprise of 5.64%.
 
Let’s see how things are shaping up for this announcement.
 
Key Factors to Consider
 
Improving global macroeconomic conditions and industrial production, growing orders bode well for a fiscal third-quarter performance. The company will benefit from growth in heavy industries vertical.  However, the Transportation vertical will remain weak. Even though new program commitments for electric vehicles hold promise, management remains uncertain regarding the timing of the capital spending as automotive manufacturers may be deferring MRO spending until they finalize plans for accelerated investment for the electric vehicle market.
 
Rockwell Automation, Inc. Price and EPS Surprise
 
Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. price-eps-surprise | Rockwell Automation, Inc. Quote

The Zacks Consensus Estimate for the Architecture & Software segment’s net sales is pegged at $783 million, an estimated year-over-year rise of 7%. The estimate for the Control Products & Solutions segment’s sales is pegged at $914 million, an increase of 5% over the prior-year quarter.

 
The Architecture & Software segment’s operating profit is expected to increase 11% on a year-over-year basis to $226 million. Operating profit for the Control Products & Solutions segment is anticipated to improve 13% year over year to $150 million.
 
The Zacks Consensus Estimate for revenues for the third quarter is pegged at $1.70 billion, depicting a year-over-year rise of 6%. The consensus estimate for earnings at $2.03 per share reflects a year-over-year improvement 15%. Shares of the company have appreciated 4.5% over the past year outperforming growth of 2.2% recorded by the industry.
 
Earnings Whispers
 
According to our quantitative model, chances of Rockwell Automation beating the Zacks Consensus Estimate in this quarter are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.
 
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Earnings ESP: The Earnings ESP for Rockwell Automation is +0.23%.
 
Zacks Rank: Rockwell Automation currently carries a Zacks Rank #3.
 
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.
 
Other Stocks to Consider
 
Here are some companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:
 
Graco Inc. (GGG - Free Report) has an Earnings ESP of +4.00% and a Zacks Rank #1 (Strong Buy). The stock has gained around 32% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Terex Corporation (TEX - Free Report) has an Earnings ESP of +0.05% and a Zacks Rank #2 (Buy). The company’s shares have been up around 11% over the past year.
 
Altra Industrial Motion Corp. has an Earnings ESP of +2.29% and a Zacks Rank #3. Its shares have rallied over 14% in the past year.
 
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