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What's in Store for Rockwell Automation's (ROK) Q4 Earnings?

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Zacks Equity Research
·5 min read
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Rockwell Automation Inc. ROK is scheduled to report fourth-quarter and fiscal 2020 results, before market open on Nov 10.

Q4 Estimates

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $1.56 billion, indicating a decline of 9.9% from the prior-year quarter. The same for the quarter’s earnings stands at $1.73 per share, suggesting a decline of 14% from the year-ago reported figure. The figure has remained unchanged over the past 30 days.

Q3 Performance

Rockwell Automation’s adjusted earnings per share and revenues both declined on a year-over-year basis. The company beat the Zacks Consensus Estimate on both counts. It beat estimates in three of the trailing four quarters and missed the same once. It has a trailing four-quarter earnings surprise of 12.5%, 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 Our Model Indicates

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 +2.86%.

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

Factors to Note

Rockwell Automation serves discrete end markets, including automotive, semiconductor and general industries. The overall slowdown in the U.S manufacturing sector primarily due to the coronavirus pandemic had hindered demand for its products earlier. However, per the Institute for Supply Management’s report, the U.S Purchasing Managers’ Index (PMI) came in at 54.2% in July, 56% in August and 55.4% in September — denoting expansion. Also, industrial production increased at an annual rate of 39.8% for the July to September quarter. This would have translated into improved order levels for Rockwell Automation over the course of the fourth-quarter fiscal 2020. However, ongoing weakness in certain end-markets — Automotive, Tire, Food & Beverage and Life Sciences, oil and gas market, Mining/Aggregate/Cement (MAC) and Chemical might have weighed on the to-be-reported quarter’s performance.

Material cost inflation may have affected Rockwell Automation’s margins in the quarter to be reported. However, focus on productivity and initiatives to mitigate these impacts are anticipated to have benefited the company during the quarter under review. Moreover, the company announced 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.

Also, the company’s focus on expanding hardware and software products and solutions, and services through share gains in core platforms; double-digit growth in Information Solutions and Connected Services segment, and contribution from acquisitions and inorganic investments are likely to have contributed to the fiscal fourth-quarter performance.

Segment Estimates

The Zacks Consensus Estimate for the Architecture & Software segment’s fiscal fourth-quarter net sales is pegged at $697 million, suggesting a decline of 11% from the year-ago quarter. The Zacks Consensus Estimate for the segment’s operating profit stands at $180 million, indicating a slump of 12% from the prior-year quarter.

The Zacks Consensus Estimate for the Control Products & Solutions segment’s revenues is pegged at $877 million, suggesting a year-over-year decline of 8%. The Zacks Consensus Estimate for the segment’s operating profit stands at $125 million, indicating a decline of 13% from the year-ago quarter.

Share Price Performance

Over the past year, Rockwell Automation’s shares have gained 39.5%, outperforming the industry’s rally of 33.7%.

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:

Nordson Corporation NDSN has an Earnings ESP of +1.96% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

II-VI Incorporated IIVI has an Earnings ESP of +2.38% and a Zacks Rank #3.

Mueller Water Products MWA has an Earnings ESP of +8.55% and a Zacks Rank of 3.

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