Why Rockwell Automation Stock Is Falling Today

Rockwell Automation (NYSE: ROK) is struggling, due to persistent supply chain issues and sluggish demand. Shares of the industrial tech company traded down 15% as of 2 p.m. ET on Wednesday after the company reported disappointing results and trimmed guidance.

Headwinds blow Rockwell off course in the quarter

Rockwell is a provider of industrial automation and digital tools that help make warehouses and other facilities more efficient. These are important tools for customers looking to trim costs but also not must-have expenditures at times when industrial customers are worried about the economy.

The macro climate appeared to take its toll on Rockwell Automation in its most recent quarter. The company reported earnings of $2.04 per share in its fiscal first quarter ending Dec. 31 on revenue of $2.05 billion, missing estimates of $2.64 per share on $2.1 billion in revenue. Revenue was up 3.6% year over year, including the impact of acquisitions, but profits and margins were down across the board, in part due to lingering supply chain disruptions.

CEO Blake Moret said in a statement that “high levels of channel inventory and some lingering supply chain constraints continue to impact the timing of product shipments.” He added that “underlying conditions remain positive.”

The company kept its full-year revenue guidance in place but lowered its outlook for diluted earnings per share to $11.24 to $12.74 from $11.49 to $12.99.

Is Rockwell Automation a buy after disappointing quarterly results?

Moret is expecting low-single-digit revenue growth in the current year, with earnings improving as the year progresses “as orders continue to rebound.” Hopefully, he’s correct, but investors are understandably cautious.

Rockwell Automation makes tools that are an important part of the industrial base of the future and is well-positioned to gain share and grow over the long term. But the timing of that growth will very much depend on how its customers are feeling about the economy. Investors buying in today are likely to see growth eventually but should be prepared for sluggish progress in the quarters to come.

Should you invest $1,000 in Rockwell Automation right now?

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Rockwell Automation Stock Is Falling Today was originally published by The Motley Fool