Rockwell Automation Inc. (NYSE:ROK) has been performing well of late and clocked a return of 34.4% in 2016. Rockwell Automation, with market capitalization of $19.44 billion is an original equipment manufacturer (OEM) of industrial automation equipment, application specific integrated software and consulting design services. The Zacks Rank #1 (Strong Buy) stock also has a long-term expected earnings growth rate of 7.57%. If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Strong Q1 Performance
Rockwell Automation’s both top-line and bottom-line registered year-over-year growth in fiscal first-quarter 2017, surpassing the Zacks Consensus Estimate on both counts. Better-than-expected earnings were driven by higher sales, strong margin performance and lower tax rates.
Further, in the quarter, Rockwell Automation witnessed a return to positive organic growth in its largest market – the U.S. with organic growth of 1.8%, after four consecutive quarters of organic declines. Emerging markets registered double-digit growth, led by Asia Pacific (particularly India and China). Consumer and transportation verticals continued to be strong.
Upbeat Guidance
Given the strong performance as well as an improving macro outlook, Rockwell Automation increased fiscal 2017 adjusted EPS guidance range to the range of $5.95–$6.35 per share and sales growth to be in the range of 1–5%. Further, the company expects continued growth in the consumer and transportation verticals while heavy industry end markets will remain almost flat year over year.
Positive Earnings Surprise History
Rockwell Automation has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 8.16%.
Rockwell Automation, Inc. Price and EPS Surprise
Moreover, the company aims to achieve growth rates in excess of the automation market by expanding served market, strengthening competitive differentiation, and serving a wider range of industries and applications. Rockwell Automation’s objectives also include market share growth by gaining new customers and capturing a larger share of existing customer spending, improving quality and customer experience. Further, the company plans to enhance market access by building channel capacity and partner network.
Rockwell Automation’s new Connected Enterprise (CE) integrated supply chain management system will be a growth driver. With average profitability well above the corporate average, CE sales will be an integral part of Rockwell’s incremental growth and help boost margins over the next few years.
Other Stocks to Consider
Some other favourable stocks worth considering in the industrial products sector include Kennametal Inc. (NYSE:KMT) , Roper Technologies, Inc. (NYSE:ROP) and II-VI Incorporated (NASDAQ:IIVI) . All of these stocks sport the same rank as Rockwell Automation. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kennametal has delivered an average positive earnings surprise of 9.90% in the last four quarters. Kennametal shares have soared 92.2% in the past one year. Roper Technologies has delivered an average positive earnings surprise of 0.92% in the trailing four quarters and its shares have gained 26% in the past one year period. II-VI Incorporated has an average positive earnings surprise of 59.23% in the past four quarters. Its shares have gained 72.6% in the past one year.
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Rockwell Automation, Inc. (ROK): Free Stock Analysis Report
Roper Technologies, Inc. (ROP): Free Stock Analysis Report
II-VI Incorporated (IIVI): Free Stock Analysis Report
Kennametal Inc. (KMT): Free Stock Analysis Report
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