Rockwell Automation (ROK)

[Investorman]

Earnings Preview: Rockwell Automation
by: theflyonthewall.com November 07, 2008
Rockwell Automation (ROK) is expected to report Q4 earnings after market close Monday, Nov. 10, with a conference call scheduled for Tuesday, November 11 at 8:30 am ET.

Guidance
Analysts are looking for EPS of 98c on revenue of $1.5B. The consensus range is 81c to $1.03 for EPS, and $1.48B to $1.58B for revenue, according to First Call. The company gave FY08 EPS guidance when it reported its Q3 results, expecting EPS of $4.00 to $4.10 vs. consensus $4.00.

Analyst Views
In late September, Rockwell Automation announced restructuring actions designed to better align resources with growth opportunities and reduce costs in light of current and anticipated market conditions. The restructuring is the result of analysis of the company's cost structure and is expected to generate cost savings of approximately $75M in FY09, growing to $85M in FY2010. In connection with these actions the company will incur a pre-tax charge in Q4 of approximately $50M, which was not included in previous FY08 earnings guidance.

Citigroup stated in early October, it believes the company's Q4 charge suggests a tough 2009 and their recent distributor survey suggests project delays and channel inventory reductions are increasing. The firm reiterates a Sell rating on the stock. Rockwell was upgraded to Neutral from Underperform at Merrill Lynch on October 13. The firm upgraded the company due to its strong balance sheet position and relatively high cyclical returns.