We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Rockwell Automation (ROK) Down 0.9% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Rockwell Automation (ROK - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rockwell Automation due for a breakout? 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 drivers.
Rockwell Automation Inc. reported adjusted earnings per share (EPS) of $2.71 in third-quarter fiscal 2024, which surpassed the Zacks Consensus Estimate of $2.11. The bottom line declined 10% year over year, primarily attributed to lower sales volume in the Intelligent Devices, and Software & Control segments, which was offset by the improved performance of the Lifecycle Services segment.
Including one-time items, earnings were $2.71 per share compared with $3.01 in the year-ago quarter.
Total revenues were $2.05 billion, down 8.4% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $2.02 billion. Organic sales were down 8.4%. We had projected an 11.8% decline in organic sales. The variance was mainly due to the better-than-expected performance of the Lifecycle Services segment.
Acquisitions contributed 0.6% to sales growth while currency translation had a negative impact of 0.6%. We expected acquisitions and currency translation to contribute 1.5% and 0.4%, respectively.
Operational Update
The cost of sales declined 5% year over year to around $1.26 billion. The gross profit declined 13% to $795 million. Selling, general and administrative expenses were flat year over year at $501 million.
Consolidated segment operating income totaled $426.5 million, down 10% from the prior-year quarter. The total segment operating margin was 20.8% in the fiscal third quarter, lower than the prior-year period’s 21.1%. Lower sales volume, unfavorable mix, partially offset by positive price/cost, lower incentive compensation and savings from cost-cutting efforts led to the downfall in margins.
Segment Results
Intelligent Devices: Net sales amounted to $957 million, down 1% year over year. The reported figure beat our estimate of $953 million.
The segment’s operating earnings totaled $194 million compared with the year-earlier quarter’s $163 million. We predicted the segment operating earnings to be $160 million. The operating margin improved to 20.2% from the year-ago quarter’s 16.8% as positive price/cost, lower incentive compensation and the benefits from cost reduction actions were partially offset by lower sales volume.
Software & Control: Net sales slumped 32% year over year to $512 million. Reported sales surpassed our estimate of $503 million.
The segment’s operating earnings plunged 54% year over year to $121 million, lower than our expectation of $126 million. The operating margin was 23.6% compared with 34.8% in the year-earlier quarter, reflecting the impact of reduced sales volume partially offset by positive price/cost, lower incentive compensation and the gains from cost-reduction actions.
Lifecycle Services: Net sales for the segment were $581 million, up 12% year over year. We had projected the segment’s sales to be $559 million.
The segment’s operating earnings totaled $112 million compared with the year-ago quarter’s $48 million. Our estimate for operating earnings was $93 million. The variance in sales and operating profit was mainly due to higher-than-expected volumes in the quarter.
The segment’s operating margin was 19.3% compared with the year-ago quarter’s 9.3%. The improvement was driven by higher sales volume, lower incentive compensation and realized savings from cost-cutting initiatives.
Cash Position & Balance Sheet Updates
At the end of the fiscal third quarter, cash and cash equivalents were approximately $0.41 billion compared with $1.07 billion as of the end of fiscal 2023. Cash flow from operations was $431.5 million in the first nine-month period of fiscal 2024 compared with $535.1 million in the last fiscal year’s comparable period. Return on invested capital was 16% as of Jun 30, 2024.
ROK’s long-term debt was $2.6 million at the end of the quarter, lower than $2.9 billion at fiscal 2023 end.
Rockwell Automation repurchased 0.6 million shares for $161 million in the fiscal third quarter. As of the end of the quarter, $0.5 billion was available under the existing share-repurchase authorization.
2024 Outlook
Rockwell Automation expects order levels in the fourth quarter to improve on a sequential basis, but at a slower-than-expected pace. It expects to report an 8.5% decline in sales in fiscal 2024. The company had earlier projected a year-over-year sales decline in the range of 4-6%. Organic sales are anticipated to decline 10%, lower than the earlier projected range of a 6-8% decline.
ROK currently expects adjusted EPS to be around $9.60, lower than the earlier stated range of $10.00 - $11.00.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -28.11% due to these changes.
VGM Scores
At this time, Rockwell Automation has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. It's no surprise Rockwell Automation has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Rockwell Automation (ROK) Down 0.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Rockwell Automation (ROK - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rockwell Automation due for a breakout? 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 drivers.
Rockwell Automation Q3 Earnings Beat Estimates, Decline Y/Y
Rockwell Automation Inc. reported adjusted earnings per share (EPS) of $2.71 in third-quarter fiscal 2024, which surpassed the Zacks Consensus Estimate of $2.11. The bottom line declined 10% year over year, primarily attributed to lower sales volume in the Intelligent Devices, and Software & Control segments, which was offset by the improved performance of the Lifecycle Services segment.
Including one-time items, earnings were $2.71 per share compared with $3.01 in the year-ago quarter.
Total revenues were $2.05 billion, down 8.4% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $2.02 billion. Organic sales were down 8.4%. We had projected an 11.8% decline in organic sales. The variance was mainly due to the better-than-expected performance of the Lifecycle Services segment.
Acquisitions contributed 0.6% to sales growth while currency translation had a negative impact of 0.6%. We expected acquisitions and currency translation to contribute 1.5% and 0.4%, respectively.
Operational Update
The cost of sales declined 5% year over year to around $1.26 billion. The gross profit declined 13% to $795 million. Selling, general and administrative expenses were flat year over year at $501 million.
Consolidated segment operating income totaled $426.5 million, down 10% from the prior-year quarter. The total segment operating margin was 20.8% in the fiscal third quarter, lower than the prior-year period’s 21.1%. Lower sales volume, unfavorable mix, partially offset by positive price/cost, lower incentive compensation and savings from cost-cutting efforts led to the downfall in margins.
Segment Results
Intelligent Devices: Net sales amounted to $957 million, down 1% year over year. The reported figure beat our estimate of $953 million.
The segment’s operating earnings totaled $194 million compared with the year-earlier quarter’s $163 million. We predicted the segment operating earnings to be $160 million. The operating margin improved to 20.2% from the year-ago quarter’s 16.8% as positive price/cost, lower incentive compensation and the benefits from cost reduction actions were partially offset by lower sales volume.
Software & Control: Net sales slumped 32% year over year to $512 million. Reported sales surpassed our estimate of $503 million.
The segment’s operating earnings plunged 54% year over year to $121 million, lower than our expectation of $126 million. The operating margin was 23.6% compared with 34.8% in the year-earlier quarter, reflecting the impact of reduced sales volume partially offset by positive price/cost, lower incentive compensation and the gains from cost-reduction actions.
Lifecycle Services: Net sales for the segment were $581 million, up 12% year over year. We had projected the segment’s sales to be $559 million.
The segment’s operating earnings totaled $112 million compared with the year-ago quarter’s $48 million. Our estimate for operating earnings was $93 million. The variance in sales and operating profit was mainly due to higher-than-expected volumes in the quarter.
The segment’s operating margin was 19.3% compared with the year-ago quarter’s 9.3%. The improvement was driven by higher sales volume, lower incentive compensation and realized savings from cost-cutting initiatives.
Cash Position & Balance Sheet Updates
At the end of the fiscal third quarter, cash and cash equivalents were approximately $0.41 billion compared with $1.07 billion as of the end of fiscal 2023. Cash flow from operations was $431.5 million in the first nine-month period of fiscal 2024 compared with $535.1 million in the last fiscal year’s comparable period. Return on invested capital was 16% as of Jun 30, 2024.
ROK’s long-term debt was $2.6 million at the end of the quarter, lower than $2.9 billion at fiscal 2023 end.
Rockwell Automation repurchased 0.6 million shares for $161 million in the fiscal third quarter. As of the end of the quarter, $0.5 billion was available under the existing share-repurchase authorization.
2024 Outlook
Rockwell Automation expects order levels in the fourth quarter to improve on a sequential basis, but at a slower-than-expected pace. It expects to report an 8.5% decline in sales in fiscal 2024. The company had earlier projected a year-over-year sales decline in the range of 4-6%. Organic sales are anticipated to decline 10%, lower than the earlier projected range of a 6-8% decline.
ROK currently expects adjusted EPS to be around $9.60, lower than the earlier stated range of $10.00 - $11.00.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -28.11% due to these changes.
VGM Scores
At this time, Rockwell Automation has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. It's no surprise Rockwell Automation has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.