Rockwell Automation Q4 Earnings: Can ROK Hit Its $1.93 EPS Target?

in EARNINGS/INVESTING IDEAS by

Rockwell Stock Price.pngRockwell Automation, Inc. (NYSE:ROK) is scheduled to report Q4 earnings results on pre-market on November 12, 2019. The company is expected to report earnings of $1.93/share on revenue of $1.655 billion. The consensus earnings per share (EPS) of $1.93/share is based on a poll of 21 analysts and represents a decline of -8.5% over the same quarter last year when the company reported earnings of $2.11/share.

The revenue forecast of $1.655 billion based on a poll of 15 analysts implies a year-over-year (YoY) decline of -4.3%. Last year the company reported $1.730 billion in revenue for the quarter.

Expected to report EPS decline of -$0.18/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $1,655.00 $1,729.50 -4.3%
EPS $1.93 $2.11 -8.5%

Rockwell has experienced weak organic growth and the trend is expected to continue. EPS estimates would be worse if it weren’t for cuts in incentive compensation. Nevertheless the company’s stock price has been rallying since August up around 20%:

Rockwell Stock Price

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Rockwell Automation for this earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $2.31 $2.40 4.1% Beat
Q2, 2019 $2.09 $2.04 -2.4% Missed
Q1, 2019 $1.99 $2.21 11.1% Beat
Q4, 2018 $2.02 $2.11 4.2% Beat
Q3, 2018 $2.04 $2.16 5.9% Beat
Q2, 2018 $1.82 $1.89 3.7% Beat
Q1, 2018 $1.74 $1.96 12.6% Beat
Q4, 2017 $1.73 $1.69 -2.3% Missed

How important are earnings reports to Rockwell Automation’s stock price performance? It’s more important for some companies than for others. In the following table, we summarize the company’s stock price movements after earnings releases.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-07-25 $168.88 $164.62 -2.5% Decline
2019-04-25 $188.90 $178.43 -5.5% Decline
2019-01-29 $163.25 $171.87 5.3% Increase
2018-11-07 $177.07 $172.30 -2.7% Decline

The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by falling by -2.5%.

Fundamentals And Technical Analysis

Rockwell Automation is currently trading at $179.20/share, up 0.8% for the day. The company is trading at approximately 93.6% of its 52 week high of $191.48/share. The company’s stock price is up 6.1% since the last earnings report and up 0.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 59.58 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 20.1x and a forward P/E multiple of 20.3x. Rockwell Automation’s current share price also implies a price-to-book (P/B) multiple of 18.0x. The following table summarizes some other key fundamental ratios:

Data as of November 11, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 30, 2019
Stock Price (Current) $179.20
P/E Ratio 20.1x
P/E Ratio (Fwd) 20.3x
PEG Ratio -5.8
Total Debt to Capital (%) 9.7%
Levered Free Cash Flow $914.2 million
Enterprise Value / EBITDA 14.7x

Company Profile: Rockwell Automation, Inc.

Rockwell Automation, Inc. is a large-cap stock with a market capitalization of $20.806 billion and a total enterprise value of $22.133 billion. The company operates in the Industrials sector and Electrical Equipment industry.

Rockwell Automation, Inc. provides industrial automation and information technology products to its customers under the brands including Allen-Bradley and Rockwell Software.

The company is headquartered in Milwaukee, Wisconsin, and employs over 22,000 people and has customers in more than 80 countries worldwide.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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