Back to top

Image: Bigstock

Rockwell's (ROK) Q2 Earnings & Sales Top Estimates, View Up

Read MoreHide Full Article

Rockwell Automation Inc. (ROK - Free Report) reported adjusted earnings of $1.27 in third-quarter fiscal 2020 (ended Jun 31, 2020), beating the Zacks Consensus Estimate of 1.13. The bottom line, however, plummeted 47% year over year, primarily on lower sales.

Including one-time items, the company’s earnings came in at $2.73 per share compared with the $2.20 reported in the year-ago quarter.

Total revenues came in at $1,394 million, down 16.3% from the prior-year quarter. Moreover, the top-line figure outpaced the Zacks Consensus Estimate of $1,390 million. Organic sales in the quarter were down 17.6%, while foreign-currency translations had a negative impact of 1.9%. However, acquisitions contributed 3.2% to the increase in sales.

Operational Update

Cost of sales decreased 10.2% year over year to $839.8 million. Gross profit declined 24% year over year to $554.2 million. Selling, general and administrative expenses flared up 2.2% year over year to $370 million.

Consolidated segment operating income totaled $229 million, down 42.1% from the prior-year quarter. Segment operating margin was 16.5% in the fiscal third quarter compared with the prior-year quarter’s 23.8%.

Rockwell Automation, Inc. Price, Consensus and EPS Surprise

Rockwell Automation, Inc. Price, Consensus and EPS Surprise

Segment Results

Architecture & Software: Net sales came in at $621.4 million in the fiscal third quarter, registering a year-over-year decline of 16.9%. Organic sales were down 15.9%, and currency translation had a negative impact of 1.8%. However, acquisitions contributed 0.8%. Segment operating earnings came in at $148 million compared with the $223 million reported in the prior-year quarter. Segment operating margin contracted 23.8% in the quarter compared with the year-ago quarter’s 29.8%.

Control Products & Solutions: Net sales declined 15.8% year over year to $773 million in the reported quarter. Organic sales slid 18.9%, while inorganic investments boosted sales by 5.1%. Currency translation, however, reduced sales by 2%. Segment operating earnings slumped 52.6% year over year to $82 million. Segment operating margin was 10.6% compared with the year-earlier quarter’s 18.9%.

Financials

As of Jun 30, 2020, cash and cash equivalents totaled $909.8 million, down from $1,018.4 million as of Sep 30, 2019. As of Jun 30, 2020, total debt was $2.4 billion, up from $2.3 billion as of Sep 30, 2019.

Cash flow from operations for the nine-month period ended Jun 30, 2020 was $795 million compared with the $707 million generated in the prior-year comparable period. Return on invested capital was 27.9% as of Jun 30, 2020, compared with the 39% witnessed in the prior-year period.

During the fiscal third quarter, Rockwell repurchased 0.3 million shares for $48.5 million. As of the quarter end, $853.7 million was available under the existing share-repurchase authorization.

Fiscal 2020 Guidance

The company anticipates fiscal 2020 adjusted earnings per share in the band of $7.40-$7.60, up from prior estimate of $6.90-$7.70. Organic sales growth is expected to be a negative 8%. Reported sales growth is expected to be a negative 5.5%. Inorganic sales growth is projected at 4% for the fiscal year, while currency translation impact is expected to be a negative 1.5%.

The company is focused on fueling growth by organizing its business and to better align it with the evolving needs of customers. In sync with this, the company will operate three operating segments - Intelligent Devices, Software & Control, and Lifecycle Services, since the beginning of the next fiscal year.

Share Price Performance

In a year’s time, Rockwell’s shares have appreciated 40.3%, outperforming the industry’s growth of 32.4%.

Zacks Rank & Other Stocks to Consider

Rockwell currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the Industrial Products sector are Lakeland Industries, Inc. (LAKE - Free Report) , IIVI Incorporated and Energous Corporation (WATT - Free Report) . While Lakeland Industries and IIVI sport a Zacks Rank #1 (Strong Buy), Energous carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lakeland Industries has a projected earnings growth rate of 418% for fiscal 2020. The company’s shares have appreciated 50.9% in the past three months.

IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 46% in three months’ time.

Energous has an expected earnings growth rate of 44% for 2020. The stock has soared 252.6% over the past three months.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
 
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
 
See the 5 high-tech stocks now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Rockwell Automation, Inc. (ROK) - free report >>

Lakeland Industries, Inc. (LAKE) - free report >>

Energous Corporation (WATT) - free report >>

Published in