Rockwell Automation to Repurchase Shares Worth $1B - Analyst Blog

The board of on Rockwell Automation, Inc. ROK has sanctioned the repurchase of additional common stock of up to $1 billion on top of its prior repurchase authorization of $1 billion, initiated in June, 2012.

Under the previous $1 billion share buyback program, Rockwell Automation has repurchased around $777 million worth of shares. As of June 3, 2014, there were around 223 million shares outstanding.

In addition to its share buyback program, the company also announced a quarterly dividend of 58 cents a share. The dividend will be paid on Sep 10, 2014, to shareholders of record as of Aug 11, 2014. These programs are in sync with Rockwell Automation's commitment to create long-term value for investors.

Notably, Rockwell Automation facilitates returns to shareholders through dividends and buybacks. In the past four years, the company has returned over 80% of free cash flow or $2 billion to shareholders.

Rockwell Automation reported second-quarter fiscal 2014 (ended Mar 31, 2014) adjusted earnings of $1.35 per share, up 2% from the year-ago quarter. Total revenue also increased to $1,601 million in the quarter, up 5% year over year.

Rockwell Automation's cash flow from operations increased to $406 million during second-quarter 2014, as against $370 million in the year-ago comparable period. Strong balance sheet position and free cash flow, along with dividends and share repurchases are expected to generate long-term shareholder value.

Rockwell Automation reiterated its organic revenue growth rate to be in the range of 3.5–6.5% and segment margin to be about 20% for fiscal 2014. The company expects adjusted earnings per share to land in the range of $6.00 to $6.35 for the full year.

Moreover, Rockwell Automation will benefit from expansion in the emerging markets and through strategic acquisitions. However, uncertainty in the global economic scenario remains headwind.

Milwaukee, WI-based Rockwell Automation is a leading global provider of industrial automation equipment, application-specific integrated software and consulting design services. It also offers industrial automation power, control and information solutions.

Currently, Rockwell Automation carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering include iRobot Corporation IRBT, Blount International Inc. BLT and IDEX Corporation IEX. All of these stocks sport a Zacks Rank #1 (Strong Buy).