Rockwell Slips On 4Q Sales Miss; Analyst Stays Bullish


Shares of Rockwell Automation closed 2.3% lower on Tuesday after the industrial automation and information technology provider reported weaker-than-expected 4Q sales. Sales dropped 9.3% year-on-year to $1.57 billion and fell short of analysts’ expectations of $1.59 billion.

Rockwell’s (ROK) adjusted EPS declined 7% to $1.87 year-over-year but surpassed Street estimates of $1.76. The company’s CEO Blake Moret said, “Flat operating margin in the quarter and strong free cash flow, despite lower year-over-year sales, are a testament to our ability to manage costs while continuing to make strategic investments.”

For fiscal 2021, Rockwell projects 6% to 9% growth in revenues. The company foreacasts adjusted earnings to be in the range of $8.45-$8.85 per share.  (See ROK stock analysis on TipRanks).

Following the earnings release, Oppenheimer analyst Noah Kaye maintained a Buy rating and the price target of $263 (5.6% upside potential). In a note to investors, Kaye wrote, “FY21 outlook contemplates a strong back-half recovery led by discrete and hybrid end-markets and improving quality of earnings with recurring revenues up double digits. Guided FY21 incremental segment margins of 25%, reflecting incentive comp/temporary action headwinds, appear to set up potential outperformance.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 5 Buys, 5 Holds and 1 Sell. The average price target of $245.75 implies downside potential of about 1.3% to current levels. Shares are up about 23% year-to-date.

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