Saturday, July 18, 2015

Seeking Alpha: Going Its Own Way Has Been Good For Rockwell Automation

There are a lot of things about how Rockwell Automation (NYSE:ROK) runs its business that stand out as different from the likes of ABB (NYSE:ABB), Siemens (OTCPK:SIEGY), Emerson (NYSE:EMR), and Honeywell (NYSE:HON), but it's hard to argue with the results. A strong position in software and controls and a good operating structure have supported attractive margins and returns on capital, while a disciplined sense of what the company is about seems to lead the company away from value-destroying empire building. Looking at the shares, Rockwell lags only Honeywell over the last year and five years and far surpasses ABB, Siemens, and Emerson, and I believe you could argue that Honeywell's share price performance is not all that tied to its automation business.

I have a lot of confidence in the thesis that Rockwell Automation is a high-quality automation company, but I'm not as confident that the shares are a bargain today. I don't necessarily buy into the "peak margin" idea and I believe Rockwell's exposure to less-cyclical markets like consumer products is a positive, but it's tough to get the numbers to work. That said, Rockwell remains an appealing acquisition candidate as well as potential acquirer in its own right and M&A activity could drive more value.

Read more here:
Going Its Own Way Has Been Good For Rockwell Automation

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