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Why Is Rockwell Automation (ROK) Up 8.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Rockwell Automation (ROK - Free Report) . Shares have added about 8.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Rockwell Automation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Rockwell Automation Q1 Earnings & Revenues Miss Estimates
Rockwell Automation reported adjusted earnings per share (EPS) of $2.04 in first-quarter fiscal 2024, missing the Zacks Consensus Estimate of earnings of $2.62 per share. The bottom line declined 17% year over year, mainly due to lower operating margins in the Intelligent Devices and Software & Control segments.
Including other one-time items, earnings were $1.86 per share in the quarter compared with the year-ago quarter’s earnings of $3.31 per share.
Total revenues were $2.05 billion, up 3.6% from the prior-year quarter. The top line missed the Zacks Consensus Estimate of $2.62 billion. Organic sales in the quarter were up 1%, in line with our estimate. Acquisitions contributed 1.4% to sales growth, while currency translation contributed 1.2%. We expected acquisitions to contribute 1.2% and currency translation to contribute 2%.
Operational Update
The cost of sales increased 7.7% year over year to around $1.26 billion. The gross profit declined 2.3% year over year to $795 million. Selling, general and administrative expenses increased 9.4% year over year to $514 million.
Consolidated segmental operating income totaled $355.5 million, down 11% from the prior-year quarter. The total segment operating margin was 17.3% in the fiscal first quarter, lower than the prior-year period’s 20.2%. The decline in margins was due to higher investment spending, a mix between products and solutions, and lower supply-chain utilization.
Segment Results
Intelligent Devices: Net sales amounted to $927 million in the fiscal first quarter, down 1% year over year. The reported figure missed our estimate of $989 million. The segment’s operating earnings totaled $150 million compared with the year-earlier quarter’s $209 million. We predicted the segment operating earnings to be $207.5 million in the quarter. The segment’s operating margin decreased to 16.2% in the quarter from the year-ago quarter’s 22.4% due to lower sales volume, the timing of prior-year investment spending and the impact of acquisitions partially offset by positive price/cost.
Software & Control: Net sales rose 5% year over year to $604 million in the reported quarter. Reported sales surpassed our estimate of $588.6 million. The segment’s operating earnings decreased 10% year over year to $151 million. We predicted segmental operating earnings of $190 million. The segment’s operating margin was 25.0% compared with 29.2% in the year-earlier quarter, reflecting the timing of prior-year investment spending and lower supply-chain utilization partially offset by positive price/cost.
Lifecycle Services: Net sales for the segment were $521 million in the reported quarter, up 10.5% year over year. We projected the segment’s sales to be $487.9 million in the quarter. The segment’s operating earnings totaled $54.3 million compared with the year-ago quarter’s $24 million. Our estimate for the segment’s operating earnings was $23.6 million. The segment’s operating margin was 10.4% in the reported quarter compared with the year-ago quarter’s 5.2%. The improvement was driven by higher sales, lower incentive compensation and higher margins in Sensia.
Cash Position & Balance Sheet Updates
At the end of the first quarter of fiscal 2024, cash and cash equivalents were approximately $439.5 million compared with $1,071.8 million as of the end of fiscal 2023.
Cash flow from operations in the quarter was $32.6 million compared with the year-ago quarter’s $66.3 million. Return on invested capital was 18.5% as of Dec 31, 2023.
ROK’s long-term debt was $2.86 million at the end of the quarter under review, flat compared with fiscal 2023 end.
In the quarter under review, ROK repurchased 0.4 million shares for $120 million. As of the end of the quarter, $0.8 billion was available under the existing share-repurchase authorization.
FY24 Guidance
Rockwell Automation expects adjusted EPS of $12.00-$13.50 for fiscal 2024. The midpoint indicates year-over-year growth of 5%. The company expects to report sales growth of 0.5-6.5%. Organic sales growth is forecasted to range from negative 2.0% to positive 4.0%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -24.82% due to these changes.
VGM Scores
At this time, Rockwell Automation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Rockwell Automation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Rockwell Automation (ROK) Up 8.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Rockwell Automation (ROK - Free Report) . Shares have added about 8.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Rockwell Automation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Rockwell Automation Q1 Earnings & Revenues Miss Estimates
Rockwell Automation reported adjusted earnings per share (EPS) of $2.04 in first-quarter fiscal 2024, missing the Zacks Consensus Estimate of earnings of $2.62 per share. The bottom line declined 17% year over year, mainly due to lower operating margins in the Intelligent Devices and Software & Control segments.
Including other one-time items, earnings were $1.86 per share in the quarter compared with the year-ago quarter’s earnings of $3.31 per share.
Total revenues were $2.05 billion, up 3.6% from the prior-year quarter. The top line missed the Zacks Consensus Estimate of $2.62 billion. Organic sales in the quarter were up 1%, in line with our estimate. Acquisitions contributed 1.4% to sales growth, while currency translation contributed 1.2%. We expected acquisitions to contribute 1.2% and currency translation to contribute 2%.
Operational Update
The cost of sales increased 7.7% year over year to around $1.26 billion. The gross profit declined 2.3% year over year to $795 million. Selling, general and administrative expenses increased 9.4% year over year to $514 million.
Consolidated segmental operating income totaled $355.5 million, down 11% from the prior-year quarter. The total segment operating margin was 17.3% in the fiscal first quarter, lower than the prior-year period’s 20.2%. The decline in margins was due to higher investment spending, a mix between products and solutions, and lower supply-chain utilization.
Segment Results
Intelligent Devices: Net sales amounted to $927 million in the fiscal first quarter, down 1% year over year. The reported figure missed our estimate of $989 million. The segment’s operating earnings totaled $150 million compared with the year-earlier quarter’s $209 million. We predicted the segment operating earnings to be $207.5 million in the quarter. The segment’s operating margin decreased to 16.2% in the quarter from the year-ago quarter’s 22.4% due to lower sales volume, the timing of prior-year investment spending and the impact of acquisitions partially offset by positive price/cost.
Software & Control: Net sales rose 5% year over year to $604 million in the reported quarter. Reported sales surpassed our estimate of $588.6 million. The segment’s operating earnings decreased 10% year over year to $151 million. We predicted segmental operating earnings of $190 million. The segment’s operating margin was 25.0% compared with 29.2% in the year-earlier quarter, reflecting the timing of prior-year investment spending and lower supply-chain utilization partially offset by positive price/cost.
Lifecycle Services: Net sales for the segment were $521 million in the reported quarter, up 10.5% year over year. We projected the segment’s sales to be $487.9 million in the quarter. The segment’s operating earnings totaled $54.3 million compared with the year-ago quarter’s $24 million. Our estimate for the segment’s operating earnings was $23.6 million. The segment’s operating margin was 10.4% in the reported quarter compared with the year-ago quarter’s 5.2%. The improvement was driven by higher sales, lower incentive compensation and higher margins in Sensia.
Cash Position & Balance Sheet Updates
At the end of the first quarter of fiscal 2024, cash and cash equivalents were approximately $439.5 million compared with $1,071.8 million as of the end of fiscal 2023.
Cash flow from operations in the quarter was $32.6 million compared with the year-ago quarter’s $66.3 million. Return on invested capital was 18.5% as of Dec 31, 2023.
ROK’s long-term debt was $2.86 million at the end of the quarter under review, flat compared with fiscal 2023 end.
In the quarter under review, ROK repurchased 0.4 million shares for $120 million. As of the end of the quarter, $0.8 billion was available under the existing share-repurchase authorization.
FY24 Guidance
Rockwell Automation expects adjusted EPS of $12.00-$13.50 for fiscal 2024. The midpoint indicates year-over-year growth of 5%. The company expects to report sales growth of 0.5-6.5%. Organic sales growth is forecasted to range from negative 2.0% to positive 4.0%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -24.82% due to these changes.
VGM Scores
At this time, Rockwell Automation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Rockwell Automation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.