buying opportunity ahead of earnings looking for a beat . Earnings are on 7/29/2015!!!!
Rockwell Automation, Inc. (NYSE: ROK), the world's largest company dedicated to industrial automation in the cloud.
Thesis & Catalyst For Rockwell Automation, Inc.
Industrials Sector is oversold when compared to the other Sectors. Rokwell is in the XLI, and is truly on of the diamonds of the group.
I believe the companies strong track record of margin expansion and the fact that they are a leader of automation software in the cloud will offset any topline revenue softness from currency headwinds.
Operating margin is calculated as operating income divided by its revenue. Rockwell Automation Inc's operating income for the three months ended in Mar. 2015 was $291 Mil. Rockwell Automation Inc's revenue for the three months ended in Mar. 2015 was $1,551 Mil. Therefore, Rockwell Automation Inc's operating margin for the quarter that ended in Mar. 2015 was 18.75%. which are still expanding.
Return on Capital measures how well a company generates cash flow relative to the capital it has invested in its business. Rockwell Automation Inc's annualized return on invested capital (NASDAQ:ROIC) for the quarter that ended in Mar. 2015 was 42.23%. As of today, Rockwell Automation Inc's weighted average cost of capital is 11.05%. Rockwell Automation Inc generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
To compare stocks with different growth rates, Peter Lynch invented a ratio called PEG. PEG is defined as the P/E ratio divided by the growth ratio. He thinks a company with a P/E ratio equal to its growth rate is fairly valued. The PEG ratio for ROK is currently at .85 which is indicating a below average price for the growth rate.