Aspen Technology Weathering The Storm, But New Opportunities Should Be Pursued

For a business that is enormously dependent upon the energy, chemical, and engineering and construction (or E&C) sectors, Aspen Technology (NASDAQ:AZPN) is holding up quite well. Credit that, I think, to the company's management team and the strong suite of value-adding software products that help process industry managers optimize their processes and enhance productivity.

Valuation is still a serious issue for me with this stock. I fully acknowledge that high-quality companies, can, do, and should trade at premium valuations, but that still leaves little room for mistake. That said, I believe Aspen would be an attractive asset to a number of companies in the process automation space, and I believe that should keep a floor in for the stock. In terms of what would change my opinion, I would very much like to see Aspen build upon its established expertise in hydrocarbon-based process industries and expand into other process industries like food/beverage, metal/mining, pulp/paper, water, and so forth. Management has indicated some interest in doing so, and I believe this could be a meaningful future driver for the company.

Continue here:
Aspen Technology Weathering The Storm, But New Opportunities Should Be Pursued

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

Seeking Alpha: Aspen Technology - Trees Don't Grow To The Sky

I'm a fan of the industrial and process automation sector, as I believe automation is a major factor in reducing operating costs across a variety of industries. As a leading provider of process optimization software, and one of the very few that is not captive within a much larger company, makes Aspen Technology (AZPN) a company worth knowing.

Valuation is problematic here. A forward EV/EBITDA ratio of over 31 and a forward EV/revenue ratio of over 10 certainly underline some of my concerns. Even though potential long-term free cash flow growth of 10% is quite attractive, it takes some pretty unconventional thinking to argue that Aspen is any kind of bargain today.

Read more here:
Aspen Technology - Trees Don't Grow To The Sky