Monday, May 26, 2014

Rockwell Automation Equity Research

There wasn't an awful lot wrong with Rockwell Automation's  recent second-quarter results, but when a stock is priced to perfection, any hiccup will cause a negative overreaction. In truth, its earnings and commentary were slightly more bullish concerning the underlying trading conditions, and investors in companies like Emerson Electric  and General Electric  have reason to look more favorably upon future prospects. Rockwell's numbers were better than they looked.

Rockwell Automation's reports another unusual quarter
Last time around, Rockwell reported an "unusual quarter" in that it was seeing relative strength in areas where other industrial companies were weak, and vice versa. This time, its earnings report was unusual, but for a different reason: namely, because underlying conditions got better, but a combination of foreign exchange effects and tax increases meant that its full-year guidance was left unchanged.

The following table explains the subtleties of its full-year guidance change