Why Rockwell Automation Stock Is Moving Higher Today

An efficiency push at Rockwell Automation (NYSE: ROK) paid off in the latest quarterly results, providing reason for investors to get excited about the stock.

Shares of Rockwell were up 10% as of 10:15 a.m. ET, thanks to a strong earnings report and upbeat commentary about the future.

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Earnings strength in a tough sales environment

Rockwell provides the tools and systems needed for industrial automation. With companies looking for ways to cut costs, there is a lot of potential for automation tools. But Rockwell shares have gone nowhere in 2024, the result of anemic sales growth as customers shied away from investing in tech in an uncertain macro environment.

Sure enough, Rockwell reported revenue down 8% year over year to $1.88 billion in its fiscal first quarter ending Dec 31. But earnings of $1.83 per share topped Wall Street's $1.58-per-share consensus, thanks to lower-than-anticipated costs.

"Q1 margins and EPS came in well above our expectations this quarter, reflecting some early benefits of Rockwell's renewed focus on operational excellence and cost discipline," CEO Blake Moret said in a statement. "We continue to deliver on our cost reduction and margin expansion projects we outlined last year."

Is Rockwell Automation stock a buy?

Moret delivered good news on the demand front as well, saying "we are encouraged by better-than-expected order performance in the quarter, with sequential growth across all regions and business segments." New orders were up 10% year over year.

Rockwell Automation is not clear of the turbulence yet, as Moret said "some macroeconomic and policy uncertainty" continues to weigh on capital expenditures (capex) plans at large industrial customers. But the guidance is at least reason for investors to hope the worst is now over.

For long-term stockholders, Rockwell Automation's portfolio of tools to help make its customers more efficient should see sustained demand over time. And for those willing to accept some near-term uncertainty, it is a good time to consider Rockwell Automation.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rockwell Automation. The Motley Fool has a disclosure policy.