Rockwell Automation, Inc. (ROK) shares took a hit on Thursday, plummeting over 4% after the company’s fourth-quarter earnings report fell short of market expectations. The industrial automation giant saw sales slump by 21% year-over-year, reaching $2.036 billion, missing the consensus estimate of $2.065 billion. This decline was felt across all segments, with Intelligent Devices sales dropping 19%, Software & Control tumbling 39%, and even Lifecycle Services, traditionally a strong performer, showing only a 3% increase.
Despite the revenue miss, Rockwell managed to exceed analyst expectations for adjusted earnings per share (EPS), reporting $2.47 compared to the consensus of $2.41. The company’s total annual recurring revenue (ARR) grew 16% in the quarter, with organic ARR rising 14%.
While earnings performance was positive, investors are clearly concerned about the sales decline and the company’s cautious outlook for the first quarter of fiscal year 2025. Rockwell anticipates that sales in Q1 will be lower than Q4 levels, attributing this to the typical seasonality of its business and the current macroeconomic uncertainty. However, the company expects a gradual sequential improvement throughout the year, with full-year adjusted EPS projected between $8.60 and $9.80 (compared to the consensus estimate of $9.67).
Rockwell’s CEO Blake Moret acknowledged the challenging market conditions, stating that orders for the quarter came in lower than anticipated, reflecting continued softness in many of the company’s end markets. Despite the overall weakness, he highlighted the strong performance of the Lifecycle Services segment, which continues to see growth in digital services and a higher exposure to process end markets.
Investors seeking exposure to Rockwell Automation can consider ETFs like the Tema American Reshoring ETF (RSHO) and the ProShares S&P Kensho Smart Factories ETF (MAKX).
The stock’s decline reflects investor concern over the current economic climate and Rockwell’s ability to navigate the challenging landscape. It remains to be seen how the company will perform in the coming quarters, but the strong performance of its Lifecycle Services segment and the expectation of a gradual sales recovery offer some hope for the future.
