Rockwell Automation (NYSE:ROK) Q4 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Rockwell Automation, Inc. (NYSE:ROK) is scheduled to report Q4 earnings results before markets open for trading on November 10, 2020.

The company is expected to report earnings of $1.75/share on revenue of $1.582 billion. The consensus earnings per share (EPS) of $1.75/share is based on a poll of 22 analysts and represents a decline in eps of −12.8% over the same quarter last year, when the company reported earnings of $2.01/share.

The revenue forecast of $1.582 billion based on a poll of 17 analysts implies a year-over-year (YoY) decline in revenue of −8.6%. Last year the company reported $1.73 billion in revenue for the quarter.

Expected to report EPS contraction of −12.8% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $1,582.04 $1,730.20 −8.6%
EPS $1.75 $2.01 −12.8%

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, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $1.17 $1.27 8.7% Beat
Q2, 2020 $1.81 $2.43 34.6% Beat
Q1, 2020 $2.11 $2.11 0.2% Beat
Q4, 2019 $1.93 $2.01 4.2% Beat
Q3, 2019 $2.29 $2.40 4.7% Beat
Q2, 2019 $2.09 $2.04 −2.5% Missed
Q1, 2019 $1.99 $2.21 11.1% Beat
Q4, 2018 $2.02 $2.11 4.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. 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, 2020, the stock price reacted by falling −3.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 28, 2020 $229 $220.97 −3.5% Decline
April 28, 2020 $181.68 $197 8.4% Increase
January 29, 2020 $196.67 $194.81 −0.9% Decline
November 12, 2019 $179.20 $198.07 10.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.71, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.71 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Rockwell Automation, Inc. is currently trading at $249.44/share, down −0.3% for the day. The company is trading at approximately 97.6% of its 52-week high of $255.70/share. The company’s stock price is up 12.9% since the last earnings report and up 1.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 62.96 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ROK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 37.66 and a forward P/E multiple of 32.91.

Rockwell Automation, Inc.’s current share price also implies a price-to-book (P/B) multiple of 37.54. The following table summarizes some other key fundamental ratios:

Data as of November 8, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 30, 2020
Stock Price (Current) $249.44
P/E Ratio 37.7x
P/E Ratio (Fwd) 32.9x
PEG Ratio −1.6
Total Debt / Total Capital 8.5%
Levered Free Cash Flow $1.154 billion
EV / EBITDA 23.5x

Finbox

Rockwell Automation, Inc. is a large-cap stock with a market capitalization of $28.927 billion and a total enterprise value of $31.072 billion. The company operates in the Industrials sector and the Electrical Equipment industry.

Rockwell Automation, Inc. provides industrial automation and digital transformation solutions. It operates in two segments, Architecture & Software, and Control Products & Solutions. The Architecture & Software segment offers a portfolio of automation and information platforms, including hardware and software. Its products include programmable automation controllers; design, visualization, and simulation software; and human machine interface products, networking products, industrial computers, sensing devices, machine safety devices, motion control products, and independent cart technology products. This segment also offers manufacturing execution systems and analytics software to enhance operational productivity and meet regulatory requirements. The Control Products & Solutions segment offers low and medium voltage electro-mechanical and electronic motor starters, AC/DC variable frequency drives, motor control and circuit protection devices, operator and signaling devices, termination and protection devices, relays and timers, and electrical control accessories. This segment also provides pre-configured line and load power solutions, packaged drives, motor control centers, and intelligent packaged power and engineered to order automation equipment solutions; and professional lifecycle services, such as safety, security, and digital transformation consulting, as well as automation and information project delivery capabilities, plant network, cloud, cybersecurity, asset management and predictive analytics, and remote, on-site, and managed support services. It primarily serves a range of industries, which include the automotive, semiconductor, and warehousing and logistics; food and beverage, and life sciences; and oil and gas, metals, and chemicals through independent distributors and direct sales force worldwide. Rockwell Automation, Inc. was founded in 1903 and is headquartered in Milwaukee, Wisconsin.

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