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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