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Rockwell Automation

At an operational level, ROK is split between two segments: Architecture & Software and Control Products & Solutions. The Architecture & Software is the smaller but more profitable business, accounting for 44.8% of FY16 revenues, while generating an operating margin of 26.4%. The segment contains all of the hardware, software, and communications of the firm's integrated control and information architecture aimed at controlling customers' industrial processes and connecting their business enterprises. Control Products & Solutions is the larger business, with 55.2% of FY16 sales, though its share of total revenue has been declining since 2014. The segment boasted a 15.2% margin in FY16, and houses a portfolio that includes intelligent motor control and industrial control products, application expertise, and project management capabilities. From a geographic stand point, ROK does enjoy some degree of diversification, but remains a story centered around North-American at its core. Indeed, the firm sourced 60% of its revenues from the US and Canada in 2016, followed by EMEA with 19%, APAC with 13%, and Latin America with 8%. (15 Jun 2017)

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3M: 3Q18 | Event Risk Brewing?

Worth Watching: 23 Oct 2018, 9:51 PM ET - 3M (A1/AA-) had a downright ugly quarter especially when compared to other Industrial behemoths that were on the screen today including United Technologies and Caterpillar. Reported revenue sank 0.2% $8.15 bn, due primarily to currency, and cam ..

Industrials 2Q18 Review: Tariffs Tame for Now

Sector Analysis: 07 Aug 2018, 4:43 AM ET - It was a strong 2Q18 earnings season for our Industrial credits. We share the salient takeaways and touch on hot button topics such as end-market trends, tariffs and event risk.

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.
Focused

Rockwell Automation: EPG Conference Highlights

Worth Watching: 07 Jun 2018, 2:38 PM ET - Rockwell Automation (A3/A): In addition to discussing key macro takeaways from the EPG conference at the end of May and featuring more than fifteen other Industrial credits in our sector report, we highlight color specifically from ROK. ..
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US Industrials: EPG Conference | Macro to Micro

Sector Analysis: 29 May 2018, 4:47 AM ET - We attended the 3-day Electrical Products Group conference in FL last week, which featured a host of Industrial firms. The macro and end-market tone was distinctly positive.  In this report we highlight key takeaways on over 15 credits.

United Technologies Scenarios: United to Divided?

Company Spotlight: 16 Apr 2018, 4:15 AM ET - We see a modest multiple expansion opportunity if management does go down the break-up route and while there is also a case whereby the SpinCos could have IG ratings, we would not rule out seeing the Climate division move into HY territory.

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.

JCI: Power Solutions in Play

IG Note: 12 Mar 2018, 9:44 PM ET - We had been flagging JCI as a credit with high event risk. Now JCI is joining other Industrials under pressure by putting Power Solutions under strategic review. We maintain our Underperform until we obtain more capital structure clarity.

Honeywell: Capital Allocation Update

IG Note: 06 Mar 2018, 8:18 PM ET - The message from HON's Investor Day last week was that capital will be allocated in a prudent manner. However, we remain guarded on the credit at current levels with a “new” CEO legacy building and there being an activist in the scene.

US Strategy: Tariffs as Repricing Event?

Strategy Analysis: 01 Mar 2018, 9:40 PM ET - The market has been building in very low odds of a trade war event, a NAFTA withdrawal, or a significant escalation of tit-for-tat trade retaliations on a broader scale.  The odds-makers just got a fresh load of input.

Section 232: The NAFTA Conundrum

Sector Analysis: 26 Feb 2018, 3:42 AM ET - Using Section 232 on Steel/Aluminum could damage supplier chains and cost structures and drive broader inflation.  A tariff gambit in such key industries could undermine the NAFTA negotiations and have immediate effects on risk pricing. 

United Technologies: Break-Up Concerns Validated

IG Note: 21 Feb 2018, 7:03 PM ET - For several years we have highlighted that there was break-up risk at United Technologies and at the Barclay’s Industrial conference, management legitimized that concern.

US Industrial 2018 Outlook: Conglomerate Conundrum

Sector Analysis: 21 Jan 2018, 9:58 PM ET - Against the backdrop of a generally favorable global demand environment, event risk is the key 2018 credit concern for the conglomerate peer group. We focus on this topic and revisit our credit recommendations for more than two dozen firms.

Dover: Risks Ratings with Spin-off Route

Worth Watching: 07 Dec 2017, 9:28 PM ET - Dover (A3/A-) placed its upstream Oil & Gas business, Wellsite under strategic review back in September and today we learned that the firm is going the spin-off route. This trend has been picking up steam across the US Industrials with recent e ..
Focused

Emerson Electric & Rockwell: Third Time’s a Charm?

Worth Watching: 16 Nov 2017, 2:13 PM ET - Emerson Electric & Rockwell: Emerson (A2/A) has not given up on its ambitions to acquire Rockwell Automation (A3/A) and today made another offer for the firm. The announcement comes as little surprise. Last week during an earnings conference cal ..

GE: Early Innings of a Long Game

IG Note: 13 Nov 2017, 10:50 PM ET - Encouraging for bondholders was seeing the dividend cut and hearing A1/P1 ratings being a target, but at this juncture we do not take such ambitions at face value and maintain our Underperform on the credit.
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Emerson Electric: Rejected by Rockwell Automation

IG Note: 31 Oct 2017, 9:47 PM ET - Emerson’s failed merger bid for Rockwell confirms our Underperform recommendation on the credit.

GE: 3Q17 | Can GE Bring Itself Back to Life?

Earnings Note: 20 Oct 2017, 11:10 PM ET - GE missed expectations by a wide margin and slashed full-year expectations. We continue to be at an Underperform on the credit until we obtain further clarity on management’s portfolio vision hopefully in a few weeks.

Dover 3Q17: The Waiting Game

Earnings Note: 19 Oct 2017, 2:58 PM ET - Dover released a solid set of third quarter results ahead of the separation of its upstream energy business, Wellsite. Until we obtain greater clarity on the company’s capital structure, we remain at an Underperform on the credit.

UTX & Rockwell Collins: Investor Call Follow Up

IG Note: 05 Sep 2017, 3:35 PM ET - After our initial take on the UTX and COL merger announcement last night, we offer some follow up thoughts.

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