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Rockwell Automation (ROK) Q4 Earnings Beat Estimates, Up Y/Y

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Rockwell Automation Inc. (ROK - Free Report) delivered adjusted earnings of $2.11 in fourth-quarter fiscal 2018 (ended Sep 30, 2018), up 25% from the prior-year quarter figure of $1.69. The bottom line also surpassed the Zacks Consensus Estimate of $2.03.

Including one-time items, the company reported earnings of $2.80 per share compared with earnings of $1.57 per share registered in the year-ago quarter.

Total revenues came in at $1,730 million, up 4% year over year but missed the Zacks Consensus Estimate of $1,778 million. Organic sales rose 7%. Foreign currency translations reduced sales by 2.2% and divestitures in the prior year reduced sales by 1.4%.

Rockwell Automation, Inc. Price, Consensus and EPS Surprise

 

Rockwell Automation, Inc. Price, Consensus and EPS Surprise | Rockwell Automation, Inc. Quote

Operational Update

Cost of sales decreased 2% year over year to $997 million. Gross profit increased 13% to $733 million from $648 million reported in the year-ago quarter. Selling, general and administrative expenses dropped 1.7% year over year to $418 million.

Consolidated segment operating income totaled $359 million, up 27% from $284 million recorded in the prior-year quarter. Segment operating margin was 20.8% in the fiscal fourth quarter, up 380 basis points from the year-earlier quarter.

Segment Results

Architecture & Software: Net sales rose 5% year over year to $787 million in the fiscal fourth quarter. While organic sales were up 7%, currency translation reduced sales by 2.3%. Segment operating earnings came in at $220 million compared with $178 million recorded in the prior year. Segment operating margin was 27.9% compared with 23.7% witnessed in the year-ago quarter.

Control Products & Solutions: Net sales climbed 3% year over year to $942 million in the reported quarter. While organic sales increased 7.5%, currency translation reduced sales by 2.1% and the prior-year divestiture reduced sales by 2.5%. Segment operating earnings increased 32% to $140 million from $106 million in the year-ago quarter. Segment operating margin came in at 14.8% compared with 11.5% recorded in the prior-year quarter.

Financials

As of Sep 30, 2018, cash and cash equivalents totaled $619 million, down from $1,411 million as of Sep 30, 2017. As of Sep 30, 2018, total debt was $1,776 million, down from $1,844 million as of Sep 30, 2017.

Cash flow from operations in fiscal 2018 summed $1,300 million compared with $1,034 million in fiscal 2017. Return on invested capital was 48% as of Sep 30, 2018, up from 39% as of Sep 30, 2017.

During the reported quarter, Rockwell Automation repurchased 2.2 million shares for $396 million. As of the quarter end, $1,108.4 million was available under the existing share-repurchase authorization.

Fiscal 2018 Performance

Rockwell Automation reported adjusted earnings per share of $8.11 in fiscal 2018, up 20% from $6.76 per share recorded last year. The reported figure also surpassed the Zacks Consensus Estimate of $8.03 and came above management’s guided range of $7.90-$8.10. Including one-time items, the bottom line came in at $4.21, down 34% from $6.35 recorded in fiscal 2017.

Revenues jumped 5.6% year over year to $6.7 billion from $6.3 billion in fiscal 2017. The top line came in line with the Zacks Consensus Estimate.

Guidance

For fiscal 2019, Rockwell Automation expects its adjusted EPS at $8.85-$9.25. It also anticipates organic sales to grow 3.7-6.7%. Moreover, focus on productivity, actions to mitigate the impact of tariffs and favorable macroeconomic indicators are expected to drive the company’s growth. However, global trade tensions remain a woe.

Share Price Performance

In a year’s time, Rockwell Automation has underperformed its industry. Shares of the company have lost 12% compared with the industry’s 11% decline.



Zacks Rank & Other Stocks to Consider

Rockwell Automation carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same sector include Atkore International Group Inc. (ATKR - Free Report) , Enersys (ENS - Free Report) and Encore Wire Corporation (WIRE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atkore has a long-term earnings growth rate of 10%. Its shares have rallied around 10% in the past year.

Enersys has a long-term earnings growth rate of 10%. Shares of the company have rallied 25% in a year.

Encore Wire has a long-term earnings growth rate of 10%. Shares of the company have gained 15% in a year’s time.

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