Opinions
Jim Cramer - Mad Money
Rockwell Automation Inc.
ROK-N
BUY
Jun 11, 2025
Stock price when the opinion was issued
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ROK operates as a provider of industrial automation solutions and is now trading at 24x times' Forward P/E. In the 2Q, ROK’s revenue grew 13.7% to $2.24B, missing estimates of $2.34B and EPS was $3.01 missing estimates of $3.19. Although the result was a miss for both the top and bottom lines, the company also updated a better outlook of double-digit growth (around 15%) for FY2023. The balance sheet is strong, with net debt of $3.6B and net debt/EBITDA is 1.9x. In the last five years, the company consistently grew its topline in the range of single-digit(except in 2020 due to the pandemic), gradually raising dividends and share repurchases over the years, which we like. The valuation multiple is also attractive relative to historical averages in the last five years (ranging from 20x to 33x). We are okay to enter the name at this level on recent weakness.
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More on the hardware side in the robotics ecosystem. 12-month price target of $286. Massive on the programmable-logic controller side of robotics. Big supplier to ABB and other robotic hardware companies that do the mechanics. Hardware + software, and even security.
February earnings beat on top and bottom, raised guidance. Only downside is margins are a bit skinny. Yield is 2.11%
Is +23% in the last 3 months. Last year was rough with -20% earnings, but last February they reported in-line sales and a big earnings beat. Last May, they reported another revenue beat and earnings beat. Also, they maintained their full-year sales outlook and raised their FY earnings forecast. Tariffs are not all good for ROK; some customers in cars are delaying plans (makes sense), and ROK must pay tariffs on cell phones and components. But if we see a huge wave of re-shoring to the US, ROK will be a winner.