In its fiscal second quarter of this year, Rockwell Automation (ROK 11.80%) saw both revenue and profitability slip. Yet investors found several silver linings in the company’s earnings report posted Wednesday morning, and they rewarded the stock with an almost 12% increase in price on that day. This compared favorably to the S&P 500 index’s 0.4% bump higher.
Rewarded for resilience
The quarter saw Rockwell earn slightly over $2 billion in revenue, down from the over $2.1 billion in the same period of 2024. Headline net income followed a similar trajectory, sliding to $248 million from the year-ago profit of $265 million. On a non-GAAP (adjusted) per-share basis, the company’s bottom line was $2.45, marking a slight deterioration from $2.50 in the second quarter of 2024.Â
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Investors reacted positively to this number anyway, not least because professionals following Rockwell stock were expecting worse. On average, they were projecting the company would post $1.96 billion for revenue, and $2.09 for adjusted earnings per share (EPS).
Another factor is that nothing out of the ordinary occurred with Rockwell to merit concern. In its earnings release, the company quoted CEO Blake Moret as saying that during the quarter, “We saw a healthy intake of orders across most of our lines of business, with total company book-to-bill in-line with our historical average of about 1.0.”
Higher profitability expected
One more plus for Rockwell is that it made an upward adjustment to its profitability guidance for the full fiscal year. It’s now expecting adjusted net income of $9.20 to $10.20 per share, well up from its previous estimate of $8.60 to $9.80. It only tweaked to its sales forecast, which should land at around $8.1 billion for the year.
This feels to me like a “steady as she goes,” stock. Also, due to its stated plan to offset the effect of tariffs with pricing and supply chain adjustments, it should be attractive as a hedge investment while the trade war grinds on.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rockwell Automation. The Motley Fool has a disclosure policy.
