ROK - Why Emerson Electric Stock Could Outperform Rockwell Automation Stock in 2023
Sometimes it takes a little time before investors reconsider a company following restructuring. At least, that's how it looks at Emerson Electric (NYSE: EMR) . Management's restructuring in recent years has created an automation company that deserves a valuation close to, if not more than, its U.S. peer Rockwell Automation (NYSE: ROK) . For that reason, I think Emerson will outperform Rockwell Automation next year. Here's the lowdown.
There's no doubt that automation is an attractive market to be in right now, which is why Emerson Electric's management has focused the company on it. Demand for automation is driven by its long-term cost-saving properties, allowing companies to reshore manufacturing from low-labor-cost countries. That's a key consideration as many companies faced significant supply chain difficulties in recent years as lockdowns shut down plants in various parts of the world. The other, often underappreciated, driver is the incredible productivity gains to be made from the use of digital technology in automation.
In short, the explosion of web-enabled digital technologies and analytical capability creates significant efficiency gains for manufacturers. For example, consider a manufacturing plant that's been digitally modeled in a so-called "digital twin." Data from the physical plant can be used to render a digital twin of the plant and then simulated to predict servicing requirements better, reducing valuable downtime.
For further details see:
Why Emerson Electric Stock Could Outperform Rockwell Automation Stock in 2023