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Rockwell Automation (ROK) Buys Fiix, Advances Software Strategy

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Zacks Equity Research
·4 min read
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Rockwell Automation, Inc. ROK recently completed its previously entered agreement to buy Toronto-based Artificial Intelligence-enabled computerized maintenance management system (“CMMS”) company — Fiix Inc. This buyout advances the company’s software strategy and enhances capabilities in its Lifecycle Services business. Notably, CMMS solutions help businesses operate more efficiently by not only reducing the utilization of waste and energy but also saving money.
 
While Fiix connects business systems in a bid to drive data-driven decisions, its cloud-native CMMS creates scheduling, organizing, and equipment maintenance workflows. The company’s revenues surged 70% in 2019. The buyout of Fiix will aid Rockwell Automation’s customers to monitor and improve their assets performance, and optimize maintenance work through a 360-degree view of integrated data across production, automation and maintenance.

Fiix will be reported as part of Rockwell Automation’s Software & Control operating segment. The segment, which contributed around 55% of Rockwell Automation’s revenues in fiscal 2020, provides a comprehensive portfolio of intelligent motor control, industrial control products, application expertise and project management capabilities.

Rockwell Automation is focused on buyouts that will boost its information solutions and high-value services offerings and capabilities, while expanding global presence. The company acquired Avnet Data Security, LTD in January 2020, in a bid to boost cybersecurity offerings — one of the company’s fastest-growing businesses. In line with this, in April 2020, the company completed the acquisitions of ASEM, a leading provider of digital automation technologies, and Kalypso, a privately-held U.S.-based software delivery and consulting firm specializing in the digital transformation of industrial companies with a solid client base in life sciences, consumer products and industrial high-tech. In October 2020, Rockwell Automation acquired industrial cybersecurity services provider company — Oylo.

The company has been witnessing improved order levels for the past few months and expects this momentum to continue in fiscal 2021 as well. Rockwell Automation anticipates fiscal 2021 adjusted earnings per share to be $8.45-$8.85. The guidance indicates year-over-year growth of 10%. The projection is based on the assumption of a gradual recovery in the economy, with no further pandemic-related facility closures or disruptions to the supply chain. The company estimates sales of $6.8 billion in fiscal 2021. Rockwell Automation is well-poised to benefit from focus on broadening the portfolio of hardware and software products, solutions and services.

Price Performance

Over the past year, Rockwell Automation’s shares have appreciated 27.4%, outperforming the industry’s rally of 25.3%.

Zacks Rank & Stocks to Consider

Rockwell currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include AGCO Corporation AGCO, Deere & Company DE and Avery Dennison Corporation AVY. While AGCO and Deere flaunt a Zacks Rank #1 (Strong Buy), Avery carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an estimated earnings growth rate of 21% for the ongoing year. Shares of the company have gained 55% in a year’s time.

Deere has an expected earnings growth rate of 51% for fiscal 2021. The stock has appreciated 68% in the past year.

Avery Dennison has a projected earnings growth rate of 6% for the current year. Over the past year, the company’s shares have rallied 19%.

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Rockwell Automation, Inc. (ROK) : Free Stock Analysis Report
 
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