Rockwell Automation: 12 Different Insiders Have Sold Shares This Month

| About: Rockwell Automation, (ROK)

In this article, I will feature one industrial sector company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Rockwell Automation (NYSE:ROK) provides industrial automation power, control, and information solutions. It operates in two segments, Architecture & Software and Control Products & Solutions.

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Insider selling during the last 30 days

Here is a table of Rockwell Automation's insider-trading activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
William McCormick Director Nov 22 1,500 No 12,672 shares 10.6%
Keith Nosbusch CEO Nov 11-19 222,103 No 487,237 shares + 3,608 options 31.2%
John McDermott SVP Nov 12-19 50,500 No

59,815 shares

45.8%
Frank Kulaszewicz SVP Nov 15 4,934 No 16,922 shares + 11,800 options 14.7%
Sujeet Chand SVP Nov 13 15,950 No 37,874 shares + 14,850 options 23.2%
David Dorgan VP Nov 12 7,850 No 14,414 shares 35.3%
Martin Thomas SVP Nov 11 32,350 No 18,917 shares + 1,450 options 61.4%
Douglas Hagerman SVP Nov 11 55,905 No 41,722 shares 57.3%
Susan Schmitt SVP Nov 11 3,600 No 14,465 shares 19.9%
Steven Etzel VP Nov 11 3,300 No 10,595 shares 23.7%
Dralle Rohr VP Nov 11 2,100 No 19,015 shares 9.9%
Theodore Crandall CFO Nov 7 34,050 Yes 85,422 shares + 1,450 options 28.2%
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There have been 434,142 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Rockwell Automation's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 434,142 0
October 2013 0 0
September 2013 16,219 0
August 2013 337,213 0
July 2013 11,500 0
June 2013 0 0
May 2013 59,384 0
April 2013 0 0
March 2013 0 0
February 2013 552,666 0
January 2013 61,666 0
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There have been 1,472,790 shares sold and there have been zero shares purchased by insiders this year.

Financials

Rockwell Automation reported the fiscal 2013 full-year, which ended September 30, financial results on November 7 with the following highlights:

Revenue $6.4 billion
Net income $756.3 million
Cash $1.6 billion
Debt $1.1 billion
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(Source: Earnings presentation)

Outlook

Rockwell Automation's fiscal 2014 guidance is as follows:

Revenue $6.6 billion
Organic sales growth 2% to 6%
Adjusted EPS $5.95-$6.35
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(Source: Earnings presentation)

Competition

Rockwell Automation's competitors include Siemens (SI), ABB Ltd (NYSE:ABB), and Honeywell International (NYSE:HON). Here is a table comparing these companies.

Company ROK SI ABB HON Industry Average (Diversified Machinery)
Market Cap: 15.71B 111.00B 58.11B 69.51B 866.29M
Employees: N/A 362,000 146,100 132,000 2.45K
Qtrly Rev Growth (yoy): 0.03 -0.02 0.08 0.03 0.12
Revenue: 6.35B 98.24B 41.50B 38.25B 1.08B
Gross Margin: 0.40 0.27 0.29 0.26 0.31
EBITDA: 1.17B 10.55B 5.72B 5.53B 96.85M
Operating Margin: 0.16 0.07 0.11 0.12 0.07
Net Income: 755.20M 5.29B 2.88B 3.23B N/A
EPS: 5.36 6.50 1.25 4.05 0.83
P/E: 21.14 20.26 20.26 21.90 17.13
PEG (5 yr expected): 1.56 0.22 1.50 1.70 1.38
P/S: 2.47 1.13 1.40 1.82 1.00
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Rockwell Automation has the highest P/S ratio among these four companies. In Honeywell, there have been 1,901,976 shares sold and there have been 1,000 shares purchased by insiders this year. Honeywell has also seen intensive insider selling during the last 30 days.

Conclusion

There have been 12 different insiders selling Rockwell Automation and there have not been any insiders buying Rockwell Automation during the last 30 days. Eleven of these 12 insiders decreased their holdings by more than 10%. Rockwell Automation has an insider ownership of 0.70%.

Rockwell Automation is trading at a P/E ratio of 21.14 and a forward P/E ratio of 16.62. The company has a book value of $18.65 per share and the stock has a dividend yield of 2.05%.

Before entering short Rockwell Automation, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.