Rockwell Automation, Inc. (NYSE:) reported adjusted earnings per share of $1.55 in second-quarter fiscal 2017 (ended Mar 31, 2017), up 13% from $1.37 earned in the prior-year quarter. Further, earnings outpaced the Zacks Consensus Estimate of $1.40, a positive earnings surprise of 11%. The year-over-year performance was driven by higher sales, and lower effective tax rates, partially offset by higher incentive compensation.
Including one-time items, the company’s earnings came in at $1.45 per share, up 13% from the year-ago quarter figure of $1.28.
Total revenue was $1.55 million in the quarter, up 8% year over year and surpassed the Zacks Consensus Estimate of $1.48 billion. Organic sales rose 6.8%, acquisitions contributed 1.7% while unfavorable foreign currency translations had an impact of 0.6%.
Operational Update
Cost of sales increased 6% year over year to $898 million. Gross profit went up 11% to $657 million from $594 million in the year-ago quarter. Selling, general and administrative expenses increased 14% to $409 million.
Consolidated segment operating income was $296 million, up 7% from $277 million in the prior-year quarter. Segment operating margin was 19% in the quarter, a 30 basis points contraction from the prior-year quarter on the back of higher sales, partially neutralized by higher incentive compensation.
Rockwell Automation, Inc. Price, Consensus and EPS Surprise
Rockwell Automation, Inc. Price, Consensus and EPS Surprise | Rockwell Automation, Inc. Quote
Segment Results
Architecture & Software: Net sales rose 14% year over year to $719 million in second-quarter fiscal 2017. Organic sales increased 13.7%, acquisitions contributed 1.2% while currency translations hurt sales by 0.7%. Segment operating earnings were $191 million, compared with $55 million a year ago. Segment operating margin was 26.5%, up from 24.6% in the prior-year quarter on the back of higher sales, partially offset by higher incentive compensation.
Control Products & Solutions: Net sales rose 3% to $835 million in the reported quarter. Organic sales increased 1.4%, acquisitions contributed 2%, while currency translations dented sales by 0.4%. Segment operating earnings dropped 14% to $105 million from $123 million in the year-ago quarter.
Financials
As of Mar 31, 2017, cash and cash equivalents were $1,440.8 million, down from $1,526.4 million as of Sep 30, 2016. As of Mar 31, 2017, total debt was $1,863.4 million, down from $1,964.3 million as of Sep 30, 2016.
Cash flow from operations for first-half fiscal 2017 came in at $612 million compared with $399 million in the prior-year comparable period. Return on invested capital was 36.4% as of Mar 31, 2017, increasing from 32.0% in the year-ago quarter.
During the reported quarter, Rockwell Automation repurchased 690,000 of its shares for $105 million. As of Mar 31, 2017, $759 million was available under the existing share repurchase authorization.
Guidance
Rockwell Automation stated that the macro environment continues to improve, with projections of Industrial Production growth rates higher than a quarter ago. Moreover, backed by strong performance in first-half fiscal 2017, Rockwell Automation has increased fiscal 2017 sales growth guidance to the range of 4.5–7.5 %. The company now anticipates adjusted EPS in the range of $6.45–$6.75 per share.Rockwell Automation's shares have outperformed the Zacks categorized Industrial Automation/Robotics sub industry in the past one year. The company’s share price has surged 41.4%, while the subindustry witnessed a gain of 36.7%.
Zacks Rank & Key Picks
Currently, Rockwell Automation carries a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the same sector are Donaldson Company, Inc. (NYSE:) , Casella Waste Systems, Inc. (NASDAQ:) and Parker-Hannifin Corporation (NYSE:) . All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Donaldson Company has an average positive earnings surprise of 5.93% in the trailing four quarters. Casella Waste generated an outstanding average positive earnings surprise of 165.21% in the past four quarters, while Parker-Hannifin has an average positive earnings surprise of 12.44% in the trailing four quarters.
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