Rockwell Automation, Inc.

Analysis of ROK Stock

Technical Perspective ROK shows strong long-term resilience, trading well above its 52-week low, though recent short-term weakness—down nearly 8% over one month—suggests caution. The stock’s high beta of 1.5 indicates it is more volatile than the market, yet its position in the upper 64% of its yearly range implies room for recovery rather than overextension.

Fundamental Assessment The company maintains solid profitability with improved net margins, but declining quarterly revenue signals potential top-line pressure. Financially, ROK exhibits moderate leverage and adequate cash flow coverage, though its liquidity is somewhat tight and operational efficiency could be enhanced through better working capital management.

Valuation & Risk ROK’s valuation appears elevated on absolute metrics like P/E, but its PEG ratio of 0.30 suggests strong growth potential that may justify the premium. Key risks include high market sensitivity and historical drawdowns, requiring investor tolerance for volatility.

Recommendation

ROK presents a mixed but cautiously optimistic profile. Solid profitability, reasonable debt levels, and a compelling growth-adjusted valuation (PEG) support upside potential, though investors must be comfortable with volatility and monitor revenue trends. For those with a moderate risk appetite and a focus on industrial sector growth, ROK appears worthy of consideration.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the analysis provided, here is a 12-month outlook for Rockwell Automation (ROK):

Rockwell's outlook is cautiously optimistic, with its primary catalysts being its compelling growth-adjusted valuation (low PEG ratio) and strong positioning in the industrial automation sector, which should benefit from long-term trends like nearshoring and smart manufacturing. The key risk remains its high market sensitivity (beta of 1.5), making it susceptible to broader economic slowdowns that could exacerbate the already-present quarterly revenue declines. While a specific analyst target isn't provided, the stock's current position in the upper 64% of its yearly range, combined with solid fundamentals, suggests potential for recovery from recent weakness, with a target range likely in the mid-$400s assuming stable market conditions. Investors should be prepared for significant volatility.

Wall Street Consensus

Most Wall Street analysts are optimistic about Rockwell Automation, Inc.'s 12-month outlook, with consensus target around $395.38, indicating expected upside potential.

Overall, ROK has investment potential but also faces challenges. Here are key factors to weigh before investing.

ROK has demonstrated strong long-term performance despite recent weakness, currently trading 80% above its 52-week low. The stock exhibits high volatility with a beta of 1.5, having experienced significant maximum drawdown but maintaining substantial recovery momentum.

Short-term performance shows concerning weakness with a 7.76% decline over one month, extending to a 0.92% loss over three months. The stock has modestly underperformed the market by 0.9% during the recent quarter, indicating relative weakness in the current environment.

Currently trading at $388.47, ROK sits in the upper 64% of its 52-week range, suggesting the stock is moderately extended from oversold levels but not yet at overbought territory. The position reflects partial recovery from recent highs while maintaining substantial gains from yearly lows.

Revenue & Profitability ROK demonstrates stable profitability with Q1 2026 net income margin of 14.5%, showing improvement from Q4 2025's 6.0%. However, revenue declined sequentially from $2.32 billion to $2.11 billion, indicating potential top-line pressure. The company maintains solid operational discipline with an operating margin of 17.4%.

Financial Health The company maintains moderate leverage with a debt-to-equity ratio of 1.08 and debt ratio of 36.1%. Cash flow coverage appears adequate with an interest coverage ratio of 11.5x, though the current ratio of 1.07 indicates manageable but somewhat tight liquidity. Operating cash flow generation remains positive at 11.1% of sales.

Operational Efficiency ROK shows moderate efficiency metrics with ROE of 8.1% and asset turnover of 0.19. The operating cycle of 176 days, driven by high days sales outstanding (76 days) and inventory days (101 days), suggests opportunities for working capital optimization. Fixed asset turnover of 5.8 indicates effective utilization of property and equipment.

Valuation Level: ROK's current valuation appears elevated, with a trailing PE of 50.0 and a forward PE of 35.9 indicating high earnings expectations from the market. However, the exceptionally low PEG ratio of 0.30 suggests strong growth potential that may justify this premium, as it indicates the company's earnings growth rate substantially outpaces its PE multiple.

Peer Comparison: Without specific industry average data, a conclusive peer comparison cannot be made. The high EV/EBITDA multiple of 105.0 and elevated PB ratio of 11.49 typically signal premium valuation, but their appropriateness depends entirely on industry norms which are unavailable for this analysis.

ROK's beta of 1.527 indicates it is significantly more volatile than the broader market, experiencing price swings that are roughly 50% more pronounced. This inherent volatility is further confirmed by a substantial one-year maximum drawdown of -27.78%, demonstrating a history of significant peak-to-trough declines. Investors should therefore be prepared for a higher-risk, potentially higher-reward profile compared to the market average, with notable price fluctuations during periods of market stress.

While short interest is not a current concern, which is a positive sign regarding market sentiment, the stock's high beta necessitates consideration of its sensitivity to broad market downturns. Other potential risks that warrant monitoring include its liquidity profile, which could impact trade execution during volatile periods, and company-specific factors like exposure to economic cycles or competitive pressures within its industrial sector.