Rockwell Automation (ROK) Hits 52-Week High: What's Driving It?
Shares of Rockwell Automation, Inc. ROK scaled a fresh 52-week high of $221.31 during the May 28 trading session, before retracting to close at $216.40. Cost-control actions, acquisitions, and continued expansion of products, solutions and services portfolio have contributed to this rally.
The company has a market capitalization of $25.4 billion. Rockwell Automation has an expected long-term earnings per share growth rate of 5.4%.
Rockwell Automation has outpaced the Zacks Consensus Estimate in three of the trailing four quarters and met in the other. It has a trailing four-quarter average positive earnings surprise of 10.57%.
Share Price Performance
In the past year, the stock has gained 39.2%, outperforming the industry’s growth of 28.5%.
Q2 Earnings Beat: Rockwell Automation reported adjusted earnings of $2.43 in second-quarter fiscal 2020 (ended Mar 31, 2020), beating the Zacks Consensus Estimate of $1.83. The bottom line improved 19% from the $2.04 reported in the prior-year quarter, primarily on lower incentive compensation expense.
Driving Factors
The company has announced temporary cost-containment measures in view of the weak demand and uncertain market conditions on account of the COVID-19 pandemic. It is cutting down discretionary spending across the organization, and rolling out other temporary cost actions. Rockwell Automation has also announced salary cuts. These actions are expected to generate $150 million of savings in fiscal 2020.
Demand for packaged food and beverages are rising due to the travel restrictions imposed by governments around the world. Roughly 70% retail for grocery stores and home delivery and 30% foodservice for restaurants contribute to the Food & Beverage business. Further, the company is implementing freight surcharges to mitigate elevated supply-chain costs.
The company will also benefit from its focus on broadening the portfolio of hardware and software products, solutions and services. Further, significant investments to globalize manufacturing, product development and customer-facing resources will stoke growth. The company is likely to witness above-market growth through a combination of share gains in core platforms, double-digit growth in Information Solutions and Connected Services segment, and contributions from acquisitions and inorganic investments.
Zacks Rank & Stocks to Consider
Rockwell Automation currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Silgan Holdings Inc. SLGN, Broadwind Energy, Inc. BWEN and Energous Corporation WATT. While Silgan sports a Zacks Rank #1 (Strong Buy), Broadwind Energy and Energous carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 11.3% for 2020. The company’s shares have gained 15% in the past three months.
Broadwind Energy has an expected earnings growth rate of 174% for the current year. The stock has appreciated 6% over the past three months.
Energous has an estimated earnings growth rate of 17.3% for the ongoing year. The company’s shares have rallied 37% in three months’ time.
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