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Rockwell Automation (ROK) to Post Q1 Earnings: What to Expect?

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Zacks Equity Research
·5 min read
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Rockwell Automation Inc. ROK is scheduled to report first-quarter fiscal 2021 results, before market open on Jan 26.

Q1 Estimates

The Zacks Consensus Estimate for fiscal first-quarter 2021 revenues is pegged at $1.61 billion, indicating a decline of 4.2% from the prior-year quarter. The same for earnings stands at $1.92 per share, suggesting a slump of 9% from the year-ago reported figure. The figure has remained unchanged over the past 30 days.

Q4 Performance

Rockwell Automation’s adjusted earnings per share and revenues both declined on a year-over-year basis. While earnings beat the Zacks Consensus Estimate, revenues missed the same. The company has surpassed earnings estimates in three of the trailing four quarters and matched the same once. It has a trailing four-quarter earnings surprise of 12.7%, on average.

Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. Price and EPS Surprise
Rockwell Automation, Inc. Price and EPS Surprise

Rockwell Automation, Inc. price-eps-surprise | Rockwell Automation, Inc. Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Rockwell Automation this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Rockwell Automation is +3.44%.

Zacks Rank: Rockwell Automation currently carries a Zacks Rank #3.

Factors to Note

Rockwell Automation booked its largest order in fourth-quarter fiscal 2020 from the U.S. Navy. Per the contract, the U.S. Navy will be using the company’s independent cart technology that provides highly responsive motion control, which is not available with traditional systems. Notably, it has been witnessing improved order levels over the past few months.

The overall slowdown in the U.S manufacturing sector primarily due to the coronavirus pandemic had hindered demand for Rockwell Automation’s products earlier. However, per the Institute for Supply Management, the U.S Purchasing Managers’ Index (PMI) came in at 59.3% in October, 57.5% in November and 60.7% in December — denoting expansion. Also, industrial production increased at an annual rate of 8.4% for the October-December quarter. This may have translated into improved order levels for Rockwell Automation over the course of first-quarter fiscal 2021.

Moreover, demand for packaged food and beverages has been strong amid travel restrictions imposed by governments worldwide. Rockwell Automation's Food & Beverage business is roughly 70% retail for grocery stores and home delivery and 30% foodservice for restaurants. Demand has also picked up in automotive industry owing to easing of COVID-induced restrictions, pent-up demand, easier credit conditions and preference for personal mobility. Also, demand in the semiconductor industry improved in the quarter under review. These factors are likely to get reflected in the company’s fiscal first-quarter top line. Also, recent acquisitions of Kalypso , ASEM and Oylo might have contributed to the to-be-reported quarter’s performance.

However, earnings in first-quarter fiscal 2021 adjusted earnings per share is likely to be lower than fourth-quarter fiscal 2020, due to a sequential headwind of 30 cents related to increased incentive compensation expense and reversal of temporary cost actions enacted in fiscal 2020.

Focus on productivity improvements are anticipated to have benefited the company during the quarter under review. Moreover, Rockwell Automation has taken temporary cost-containment measures in the wake of weak demand and uncertain market conditions due to the pandemic. It has also been taking preemptive actions to align cost structure with the current turbulent economic environment. This may have boosted margin performance in the to-be-reported quarter.

Segment Estimates

The Zacks Consensus Estimate for the Architecture & Software segment’s fiscal fourth-quarter net sales is pegged at $726 million, suggesting a decline of 3% from the year-ago quarter. The Zacks Consensus Estimate for the segment’s operating profit stands at $210 million, indicating a slump of 6% from the prior-year quarter.

The Zacks Consensus Estimate for the Control Products & Solutions segment’s revenues is pegged at $870 million, suggesting a year-over-year decline of 7%. The Zacks Consensus Estimate for the segment’s operating profit stands at $98 million, indicating a decrease of 15% from the year-ago quarter.

Share Price Performance

Over the past year, Rockwell Automation’s shares have gained 30.8%, compared with the industry’s rally of 31.2%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other Industrial Products stocks, which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases:

AGCO Corporation AGCO has an Earnings ESP of +1.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV has an Earnings ESP of +5.55% and a Zacks Rank #2.

Sealed Air Corporation SEE has an Earnings ESP of +2.90% and a Zacks Rank of 2.

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