Rockwell Automation Hits New 52-Week High - Analyst Blog

Shares of Rockwell Automation, Inc. ROK reached a new 52-week high of $128.57 on Jun 9 before closing lower at $127.83. Rockwell Automation has delivered a year-to-date return of 52.76%, outperforming the S&P 500 return of 22.80%. Average volume of shares traded over the last 3 months is approximately 722K.

Milwaukee, WI-based Rockwell Automation is a leading global provider of industrial automation equipment, application-specific integrated software and consulting design services. With a market cap of $17.7 billion, the company has long-term estimated earnings per share growth rate of 11.20%.

Growth Drivers

Shares of Rockwell Automation got a lift on the news on Jun 4 that its board has sanctioned an additional repurchase of its common stock up to $1 billion, over its prior $1 billion authorization.

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 enhanced 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 creating 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 shares have been on the rise following its second-quarter fiscal 2014 (ended Mar 31, 2014) reported on Apr 30. The company reported adjusted earnings of $1.35 per share, up 2% from the year-ago quarter.

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.

The company will benefit from expansion in emerging markets and acquisitions. In addition, a strong balance sheet and free cash flow, along with dividends and share repurchases, will drive growth.

Other Stocks to Consider

Rockwell Automation currently holds a Zacks Rank #3 (Hold). Some better performing stocks in the sector include Gorman-Rupp Co. GRC, iRobot Corporation IRBT and Blount International Inc. BLT. While Gorman-Rupp holds a Zacks Rank #1 (Strong Buy), iRobot and Blount carry a Zacks Rank #2 (Buy).