Rockwell Automation Inc. ROK is expected to witness declines in both revenues and earnings when it reports third-quarter fiscal 2024 results on Aug 7, before the opening bell.
The Zacks Consensus Estimate for earnings has been unchanged over the past 30 days at $2.11 per share. The consensus mark implies a 30% plunge from the year-ago actual. The consensus estimate for revenues is pegged at $2.02 billion, indicating a 10% year-over-year decline.
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Mixed Earnings Surprise History
ROK’s earnings surpassed estimates twice in the trailing four quarters and missed on the remaining two occasions, the average surprise being a negative 1.80%. This is depicted in the following chart.
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Factors to Note
The Institute for Supply Management’s manufacturing index registered 48.5% in June 2024, which not only marked a deceleration from 48.7% in May and 49.2% in April, but it also remained below 50%, which indicates contraction. Demand remained subdued as companies refrained from making capital investments. This was evident from the New Orders Index, which also remained below 50 through April-June.
In the fiscal second quarter, the company reported negative 8.1% organic growth. It noted that there had been a buildup of excess inventory among customers, particularly machine builders. It stated that it did not expect a significant acceleration in order levels this fiscal year.
This decrease in order levels is likely to have reflected in Rockwell Automation’s third-quarter top-line performance. This downside is expected to have been offset by favorable pricing. Our model predicts an organic sales decline of 11.8%. This will be offset by a 1.5% contribution from acquisitions and a 0.4% gain from favorable currency impact.
Rockwell Automation has been experiencing increased logistics prices due to higher energy costs and constrained air freight lanes. Also, an increase in spending on talent and growth, unfavorable mix, and currency are expected to have impacted margins.
Segment Expectations
We expect the Intelligent Devices segment’s fiscal third-quarter revenues to be down 1.6% year over year to $953 million. Our prediction for the segment’s operating profit is pinned at $161 million, indicating a year-over-year decrease of 2%.
Our model predicts the Software & Control segment’s sales to be $503 million, suggesting a 33% decline from the prior year’s actual. The segment’s operating profit, which is pinned at $126 million, indicates a 52% plunge from the year-ago quarter’s reported figure.
We expect the Lifecycle Services segment’s sales to be $559 million, implying 7.5% growth from the prior-year period’s actual. The estimate for the segment’s operating profit is $93 million. The figure indicates a 92% surge from the year-ago quarter’s reported figure.
What the Zacks Model Indicates
Our proven model does not conclusively predict an earnings beat for Rockwell Automation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Rockwell Automation has an Earnings ESP of -2.67%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Price Performance
In the past year, Rockwell Automation’s shares have lost 13% compared with the industry’s 15.5% decline.
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Stocks to Consider
Here are some companies with the right combination of elements to post an earnings beat in their upcoming releases.
Emerson Electric Co. EMR is scheduled to release its fiscal third-quarter results on Aug 7. It has an Earnings ESP of +0.14% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EMR’s earnings is pegged at $1.42 per share, indicating year-over-year growth of 10.1%. It has a trailing four-quarter average earnings surprise of 10.7%.
Atkore Inc. ATKR is scheduled to release its fiscal third-quarter fiscal results on Aug 6. It has an Earnings ESP of +0.62% and a Zacks Rank of 3 at present.
The Zacks Consensus Estimate for ATKR’s earnings is pegged at $4.03 per share, indicating a year-over-year fall of 29.6%. It has a trailing four-quarter average earnings surprise of 15.4%.
Plug Power PLUG, scheduled to release its second-quarter results on Aug 8, has an Earnings ESP of +1.67% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Plug Power’s earnings is currently pegged at a loss of 30 cents per share, indicating an improvement from the loss of 35 cents per share reported in the year-ago quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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