Market Inference Overview -- ROK Stock

Rockwell Automation logged a 1.1% change during today's morning session, and is now trading at a price of $261.36 per share.

Rockwell Automation returned gains of 7.0% last year, with its stock price reaching a high of $348.52 and a low of $240.31. Over the same period, the stock underperformed the S&P 500 index by -9.0%. As of April 2023, the company's 50-day average price was $286.76. Rockwell Automation, Inc. provides industrial automation and digital transformation solutions in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Based in Milwaukee, WI, the large-cap Industrials company has 29,000 full time employees. Rockwell Automation has offered a 1.8% dividend yield over the last 12 months.

Growing Revenues With a Flat Capital Expenditure Trend:

2018 2019 2020 2021 2022 2023
Revenue (MM) $6,666 $6,695 $6,330 $6,997 $7,760 $8,498
Gross Margins 43% 43% 41% 41% 40% 41%
Operating Margins 20.0% 13.0% 18.0% 22.0% 14.0% 18.0%
Net Margins 8.0% 10.0% 16.0% 19.0% 12.0% 15.0%
Net Income (MM) $536 $696 $1,023 $1,358 $932 $1,281
Net Interest Expense (MM) $73 $98 $104 $95 $123 $132
Depreciation & Amort. (MM) $136 $126 $122 $124 $127 $128
Earnings Per Share $4.21 $5.83 $8.77 $11.58 $7.97 $11.0
Diluted Shares (MM) 127 119 117 117 117 114
Free Cash Flow (MM) $1,174 $1,049 $1,007 $1,141 $682 $796
Capital Expenditures (MM) $126 $133 $114 $120 $141 $138
Net Current Assets (MM) -$742 -$909 -$1,165 -$1,072 -$999 -$596
Long Term Debt (MM) $1,235 $1,953 $1,980 $3,465 $2,868 $0
Net Debt / EBITDA 0.84 1.32 1.09 2.13 2.96 0.27

Rockwell Automation benefits from growing revenues and a flat capital expenditure trend, low leverage, and wider gross margins than its peer group. The company's financial statements show decent operating margins with a stable trend and a strong EPS growth trend. Furthermore, Rockwell Automation has irregular cash flows.

Rockwell Automation's Valuation Is in Line With Its Sector Averages:

Rockwell Automation has a trailing twelve month P/E ratio of 24.0, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $13.22, the company has a forward P/E ratio of 21.7. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 17.4%. On this basis, Rockwell Automation's PEG ratio is 1.38. Using instead the 9.9% weighted average of Rockwell Automation's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 2.42, which suggests that its shares may be overpriced. Furthermore, Rockwell Automation is likely overvalued compared to the book value of its equity, since its P/B ratio of 8.48 is higher than the sector average of 3.78. The company's shares are currently trading 206.2% above their Graham number.

Rockwell Automation Has an Average Rating of Hold:

The 18 analysts following Rockwell Automation have set target prices ranging from $220.0 to $375.0 per share, for an average of $311.78 with a hold rating. As of April 2023, the company is trading -8.0% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Rockwell Automation has an average amount of shares sold short because 2.8% of the company's shares are sold short. Institutions own 82.8% of the company's shares, and the insider ownership rate stands at 0.15%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 12% stake in the company is worth $3,566,290,976.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.