$80 Target on Buy-Rated Rockwell
Monday September 10, 11:57 am ET
By Zacks Equity Research
Lately, strength at large-cap robotics company Rockwell Automation (NYSE: ROK - News) has provided investors with a bit of good news over the past few months. Zacks senior analyst Abdul Saleh explains why there\'s more where that came from for investors who buy shares of ROK now:
\'Rockwell Automation is the world\'s largest industrial automation company, providing power, control and information solutions to improve manufacturing productivity. March quarter top-line met consensus estimates, while the bottom line exceeded expectations. Strong segment EBIT margins contributed $0.08 upside to EPS, while a favorable tax rate added another $0.04 to the bottom line.
\'Forward guidance indicates that revenue is expected to increase 10% in fiscal 2007. The Power systems division has been divested for $1.8 billion. This has the impact of raising margins. We believe that the market has not yet impounded the recent attractive growth and earnings rates and is instead focusing on the automobile segment. Consequently, we are reiterating our Buy rating on the shares.
\'Over the past five quarters, the company\'s financial performance has benefited from a number of items, including a falling U.S. dollar, one-time benefits from divested organizations and one-time tax benefits. We do think the current growth rate is sustainable, especially given the fact that the business is highly correlated to the U.S. manufacturing base.\'
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