Rockwell Automation ROK recently unveiled the PlantPAx 5.0 distributed control system (DCS) in a bid to aid industrial manufacturers to drive digital transformation and operational excellence.
The latest DCS capabilities will help digitally transform operations with the introduction of functionality native to the controller, improved system availability, while enabling the adoption of analytics at all levels of the enterprise. The system’s in-built workflows and the usage of industry-leading cybersecurity protocols will reduce time-to-market and help plants realize profits faster.
Management has stated that the new features will help customers lower the overall design and commission costs. The functionality improves the integration of the process control layer to the enterprise. Rockwell Automation continues to focus on exploring innovative ways to unlock value for customers by reducing the plant lifecycle cost and operational risks.
Rockwell Automation is focused on broadening the portfolio of hardware and software products, solutions and services. Further, investments to globalize manufacturing, product development and customer-facing resources will drive growth. The company is likely to witness above-market growth through a combination of share gains in core platforms, double-digit growth in Information Solutions and Connected Services segment, as well as contribution from acquisitions and inorganic investments.
In fiscal 2020, Rockwell Automation acquired MESTECH Services, a global provider of Manufacturing Execution Systems/Manufacturing Operations Management, digital solutions consulting, and systems integration services. The acquisition enhances the company’s capabilities to profitably grow Information Solutions and Connected Services globally and accelerate its ability to help customers execute digital-transformation initiatives.
The company has also acquired Avnet Data Security, LTD, in a bid to boost its cybersecurity offerings — one of Rockwell Automation’s fastest-growing businesses. In April, the company completed the acquisitions of ASEM, a leading provider of digital automation technologies, and Kalypso, a privately-held U.S.-based software delivery and consulting firm specializing in the digital transformation of industrial companies with a strong client base in life sciences, consumer products and industrial high-tech. Recently, Rockwell Automation announced that it has acquired another industrial cybersecurity services provider company — Oylo. This buyout will aid Rockwell Automation to further enhance its global delivery capability in the rapidly-emerging IT/OT cybersecurity market, while expanding the cybersecurity offerings to the industrial market.
Rockwell Automation has been taking preemptive actions to align the company’s cost structure with this uncertain environment. It is trying to minimize workforce reductions. There will be no incentive compensation payouts for fiscal 2020 and the company is cutting down on discretionary spending, among others. These actions are expected to generate $150 million of savings in fiscal 2020. Efforts to improve productivity are expected to boost margins as well.
The company’s shares have appreciated 48.8% over the past year, outperforming the industry’s growth of 46.5%.
Zacks Rank & Other Stocks to Consider
Rockwell Automation currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector include Graphic Packaging Holding Company GPK, Lawson Products, Inc. LAWS and Fortune Brands Home & Security, Inc. FBHS, each carrying a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Graphic Packaging has a projected earnings growth rate of 21.8% for the current year. Shares of the company have gained 2.1% over the past year.
Lawson Products has an estimated earnings growth rate of 3.4% for 2020. The company’s shares have gained 13.9% in a year’s time.
Fortune Brands has an expected earnings growth rate of 6.9% for the ongoing year. The stock has appreciated 55.6% in the past year.
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