Wednesday, May 9, 2018

A Short-Cycle Deceleration Is Hitting Rockwell Automation

Rockwell Automation (ROK) does well when the economy is expanding and companies are spending more on factory capex - Rockwell’s performance correlates reasonably well to U.S. industrial production. Now, though, it is pretty clear that the vital auto end-market has slowed considerably, and there are signs that electronics is going the same way, while growth in heavy industries will weigh on Rockwell’s margins.

Rockwell is by no means a bad company, but the shares have often carried a premium for presumed superiority that may not be entirely deserved. What’s more, expectations for the second half of the year are not exactly easy. I definitely believe Rockwell is the sort of name you want to buy on pullbacks, but investors who want to start adding today should at least be prepared for the risk that things will get worse before they get better.

Read more here:
A Short-Cycle Deceleration Is Hitting Rockwell Automation

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