ROK - Rockwell Automation: Transformational Decade Ahead For This Industry Leader

2024-04-02 08:18:26 ET

Summary

• Rockwell Automation’s revenue growth has been weighted toward more recurring streams in recent years, reflecting a strategic shift away from product sales. This is primed to deliver margin improvement.
• ROK is a market leader for automation and transformation within the industrials industry, positioning it well to benefit from tailwinds such as increased infrastructure spending.
• ROK is either acquiring or developing the expertise it needs to succeed in the technology-enabled future we are moving toward, protecting its competitive position and priming it for growth.
• We are currently unconvinced by ROK’s valuation, as while it suggests upside, it does not wholly value the execution risk associated with delivering margin improvement.

Introduction and thesis

Rockwell Automation ( ROK ) is a leading global provider of industrial automation and digital transformation solutions. Headquartered in Milwaukee, Wisconsin, the company serves a diverse range of industries, including automotive, food and beverage, pharmaceuticals, and oil and gas, among others.

With a history dating back to 1903, Rockwell Automation has established itself as a key player in the industrial automation sector, leveraging advanced technologies to optimize manufacturing processes and improve operational efficiency for its customers worldwide....

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