Rockwell Automation
The company whose controllers, motor drives and software run North American factory lines: the boxes that tell every machine on a line what to do, and when.
The scores
Growth3/4 ↑
Organic growth of 10% in Q3 FY2026 is real, but under a year old after sales fell 8.8% in fiscal 2024.
Business quality3/4 →
Not Protected: the switching cost is real in North America, but Siemens leads worldwide and portable control software aims straight at it.
Financial position3/4 →
Net debt of about $2.8B against $1.5B or more of yearly operating cash flow; serviceable, not trivial.
Execution record3/4 ↑
Fiscal 2026 guidance raised twice, but fiscal 2024 paid no bonus, fiscal 2025 missed its sales and ARR goals, and Sensia was written down.
Per share capture4/4 →
Diluted shares fell from 117.1M to 111.6M on cash buybacks, share pay is about 1% of sales, and deals were paid in cash.
Potential2/4 →
The upside is a bigger version of today resting on an expected cycle; backlog is shrinking and the greenfield projects are uncommitted.
Risk profile3/4 →
Two distributors handle about 20% of sales; legacy asbestos and tariffs are disclosed and survivable; no binary event.
Valuation2/4 ↓
Not Fair: 33 times this year's earnings needs about 10% yearly growth for five years, the consensus view sustained beyond it.
Evidence quality3/4 →
Results and guidance are filed, but end-market growth, data-centre exposure and controller share are management's alone.
The Verdict
We rate Rockwell Automation Neutral. The business is solid: plants that run its controllers rarely switch, and after two flat years its sales are growing again, about 10% in the latest quarter. The price is full: at about 33 times this year's expected earnings, it already counts on roughly five years of strong growth, so a slowdown would hurt. The view hinges on what drives the upturn. It is riding data centres, chip plants and upgrades of existing lines, while new-factory building is falling, so the reshoring story the shares are often sold on is not yet in the numbers.
The long caseEvery new or upgraded line in North America needs controllers, and Rockwell's installed base makes it the default choice as labour shortages push automation.
The evidence under this - 6 claims
- Outside North America sales fell in fiscal 2025 in every region (C09), and Siemens's network leads worldwide (C14).
- Portable control software is being pushed to break exactly this tie (C18).
The six-year median is struck on GAAP earnings, which run below adjusted EPS, and on fiscal 2027 consensus the multiple is 29 times, so the premium to the shares' own history is smaller than 40 against 26 suggests.
- Analysts already expect about 12% a year to fiscal 2028 (C26), so the growth the price needs is the consensus view.
- Rockwell has often traded above 20 times, so a lower ending multiple may be too harsh.
- Management also reports early signs of renewed project activity in automotive and life sciences (C43).
- US robot installations rose 12% in 2025 (C13), so some new-line spending is happening.
The company
A factory line is a row of machines that must move in step. Rockwell, which grew out of the Allen-Bradley business founded in 1903, sells the parts that make them do so: controllers that run the line's program, drives that set motor speeds, safety and sensing devices, and software to design, watch and run it all.
Buyers are carmakers, food and drug plants, warehouses, chip makers and now data centres. About 65% of sales go through independent distributors. The alternative is a rival's system, mostly Siemens.
The evidence under this - 5 claims
- Outside North America sales fell in fiscal 2025 in every region (C09), and Siemens's network leads worldwide (C14).
- Portable control software is being pushed to break exactly this tie (C18).
Rockwell discloses no data-centre sales figure, so the size of this business cannot be checked, and Schneider Electric and Vertiv are the established suppliers of data-centre power and cooling.
How it makes money
About 89% of sales come from products and systems, each time a plant builds or upgrades a line; the rest is services. Software & Control, the controllers and software, is the most profitable part, keeping about 35 cents of operating profit on each dollar of sales in the latest quarter. Recurring software and service sales are a growing but still small share, so sales rise and fall with factory spending.
The evidence under this - 4 claims
Where the money comes from, stream by stream
| Stream | Share of sales (nine months to June 2026) | How it earns it |
|---|---|---|
| Intelligent Devices products | 46% | Drives, motion, safety, sensing, components and configured-to-order products, sold mostly through distributors and recognised when shipped. |
| Software & Control | 31% | Logix controllers and operator hardware sold as products, plus design, production and Plex software sold as licences and subscriptions. |
| Lifecycle Services | 23% | Engineered systems and project work recognised over time, and recurring services such as remote monitoring and cybersecurity, sold mainly by the direct sales force. |
Who runs it
Blake Moret has run the company since 2016, through the 2023 peak, the 2024 slump and this recovery. Christian Rothe, finance chief since 2024, came from Graco. The sales chief retires at the end of 2026.
Directors and officers own under 1%. The yearly bonus pays on earnings per share, organic sales, recurring sales and cash; nothing was paid for fiscal 2024, and the recurring-sales goal paid nothing for fiscal 2025.
The evidence under this - 3 claims
Why it wins, and who could beat it
Why customers come back
The hold on customers is the cost of switching. A plant's control programs are written for Logix, its technicians are trained on it, its spare parts and outside integrators all assume it, so a new line or an upgrade usually stays with what is already there.
The evidence from outside: an industry study puts the factory network Rockwell's controllers use at 23% of new connections worldwide and first in North America. Even in the 2024 slump, the controller business kept a margin above 24%.
The evidence under this - 4 claims
- Outside North America sales fell in fiscal 2025 in every region (C09), and Siemens's network leads worldwide (C14).
- Portable control software is being pushed to break exactly this tie (C18).
PROFINET, the Siemens-backed network, leads worldwide and gained more share, to 27% from 23%.
No outside body publishes controller share; the HMS study counts network nodes, not controllers (C14).
The threat
Siemens is the biggest rival and Emerson the closest listed one. The quieter threat is control software written to run on any maker's hardware, promoted by an industry association. If plants adopted it, their code would stop tying them to Rockwell. Nobody publishes how many have, and Rockwell's own controller sales are growing fastest of all its lines.
The evidence under this - 4 claims
An absent adoption figure is not evidence of no adoption; the association lists use cases across industries.
The rivals: EMR, HON, and 3 more that are private, in-house or listed abroad.
Who else does this, rival by rival
| Ticker | Rival | Where it competes | How far along | Priced against it |
|---|---|---|---|---|
| Siemens, through its Simatic controllers, TIA Portal software and PROFINET networkPriced against it: Listed abroad | Software & Control: Logix controllers, operator screens, design and production software, and industrial networks | On sale | Listed abroad | |
| Schneider Electric, Mitsubishi Electric and ABB, with their own controllers, drives and automation softwarePriced against it: Listed abroad | Intelligent Devices: drives, motion, safety, sensing, industrial components and production logistics | On sale | Listed abroad | |
| EMR · HON | Emerson and Honeywell, with DeltaV, Ovation and Experion plant control systemsPriced against it: Same product | Lifecycle Services: engineered systems, project work, remote monitoring and cybersecurity services | On sale | Same product |
| Not listed | Hardware-independent control software built on the IEC 61499 standard, promoted by the UniversalAutomation.org associationPriced against it: Not listed | Software & Control: Logix controllers, operator screens, design and production software, and industrial networks | On sale | Not listed |
How big it could get
How big this could get
Management puts the market Rockwell sells into at about $120B. The cleanest outside gauge of new lines is factory building: US spending on manufacturing construction rose from $81.0B in 2019 to $244.1B in 2024, then fell to $170.7B a year by August 2026. Robot installations in US factories still rose 12% in 2025. Nobody measures how much of a new plant's cost goes to control systems.
The evidence under this - 3 claims
No outside body publishes a comparable figure, and the $120B covers every region including those where sales fell in fiscal 2025 (C09).
Who has signed
There are no long contracts to point to; customers buy as they build. The company's backlog of orders was $2.88B at the end of fiscal 2025, a little lower than a year before, and more than half of it was in the services and projects business.
The evidence under this - 1 claim
Where the growth is coming from, business by business
Where the growth is coming from
| Business | Share of revenue | Growth: last quarter | Last half-year | Last year |
|---|---|---|---|---|
| Intelligent Devices: drives, motion, safety, sensing, industrial components and production logistics | 47% | +11.6% | +12.0% | +10.5% |
| Software & Control: Logix controllers, operator screens, design and production software, and industrial networks | 32% | +19.4% | +19.9% | +20.3% |
| Lifecycle Services: engineered systems, project work, remote monitoring and cybersecurity services | 21% | -11.9% | -5.1% | -5.1% |
| Whole company | 100% | +7.9% | +9.8% | +9.0% |
The filed split through 2026-06-30. These rates are not carried forward: the reading below says why.
How we read it: Trusts the organic blend: Software & Control's lead over the rest is inflated by the Sensia exit, which took 11 points off Lifecycle Services; organically the rest grew about 7%.
The results
The numbers
Sales grew 11% over the twelve months to Jun 2026, faster than the 0.9% in the year to Sep 2025.
Operating margin is 23%, about where it was (21%) in the year to Sep 2023.
Running costs take 32¢ of each sales dollar, up from 28¢ in the year to Sep 2023.
Each dollar put into the business earns 25% a year after tax, about where it was (23%) in the year to Sep 2023.
The business brought in $1.73B of cash from operations, 19% of sales, before capital spending, which the filer does not tag.
It owes $2.78B more than the cash it holds, about 1.6 years of the cash its operations bring in.
The share count fell 4.7% in 4.8 years, and pay in shares costs 1.0% of sales.
All the numbers
Filed figures from the company's 10-K and 10-Q, read 2026-10-10. Fiscal years end in September.
| Sep 2021 | Sep 2022 | Sep 2023 | Sep 2024 | Sep 2025 | 12 mo to Jun 2026 | |
|---|---|---|---|---|---|---|
| Size and growth | ||||||
| Sales | $7.00B | $7.76B | $9.06B | $8.26B | $8.34B | $8.97B |
| Sales growth | +11% | +11% | +17% | −8.8% | +0.9% | +11% |
| Profit | ||||||
| Gross margin | 41% | 40% | 49% | 47% | 48% | 55% |
| Operating margin | - | - | 21% | 19% | 20% | 23% |
| Net margin | 19% | 12% | 15% | 12% | 10% | 13% |
| What growth costs, per sales dollar | ||||||
| Research and development | 6.0% | 5.7% | 7.8% | 8.0% | 8.1% | 8.0% |
| Selling, general and admin | 24% | 23% | 22% | 24% | 23% | 21% |
| Pay in shares | 0.7% | 0.9% | 1.0% | 1.2% | 1.0% | 1.0% |
| Capital spending | 1.7% | 1.8% | 1.8% | 2.7% | 2.2% | - |
| Cash | ||||||
| Cash from operations | $1.26B | $823M | $1.37B | $864M | $1.54B | $1.73B |
| Free cash flow | $1.14B | $682M | $1.21B | $639M | $1.36B | - |
| Balance sheet | ||||||
| Cash and short-term investments | $663M | $503M | $1.07B | $471M | $468M | $479M |
| Debt | $3.98B | $3.84B | $2.97B | $3.64B | $3.22B | $3.26B |
| Net cash | −$3.32B | −$3.33B | −$1.89B | −$3.17B | −$2.76B | −$2.78B |
| Returns and shares | ||||||
| Return on capital | - | - | 23% | 20% | 20% | 25% |
| Shares (diluted) | 117M | 117M | 116M | 114M | 113M | 112M |
What growth costs
Growth is getting cheaper to win. Selling and office costs have fallen as a share of sales since the slump while research spending and share-based pay held steady, so each extra dollar of sales has come with a wider margin. Capital spending rises next year for a new Wisconsin plant.
The evidence under this - 2 claims
The last report (4 Aug)
Quarter ended June 2026, filed figures.
Q3 FY2026, the quarter to June, was the clearest sign yet that the slump is over. Organic sales grew 10%, with controllers and software up 18%, and operating margin rose to 22.3% from 19.5%. Management raised the year's earnings guide for the second time.
Two things held it back. The projects and services business shrank 2%, and recurring sales grew 6%, below management's own hopes. The shares fell 7.4% on the day, because management also said costs, memory chips above all, would hold the next quarter's margin flat.
What it did to the thesisIt proved the recovery is real and led by controllers, supporting the business half of the view. It did not help the price half: projects and recurring sales lagged, and costs are rising, so it left open whether earnings can grow as fast as the price needs.
The quarter in detail
Sales growth from the previous quarter, filed figures. The company has restated its own history, so a quarter either side of the restatement may describe a different business; n/c marks one that does not compare.
Earnings per share $3.49 against $3.38 expected; $3.65 as filed, the gap being what the company adds back.
The evidence under this - 5 claims
- Management guides a flat fourth-quarter margin as memory and other costs rise (C39).
- In fiscal 2025 the company grew sales 1% against its own 4.8% bonus target (C35).
What management did with the money
Rockwell pays a dividend and buys back shares steadily: about $750M in nine months, and the share count has fallen about 5% in five years. It has bought software and robot makers, and took a $224M write-down leaving a joint venture with SLB, ended in April 2026.
Insiders in 2026Q3: 4 purchases and 10 sales, from their Form 4 filings.
The evidence under this - 2 claims
The price, and where we disagree
In short. Full. The price pays for the recovery continuing at a strong pace for about five years, and leaves little room for a slower year.
The shares are up about a quarter in a year, and about half of that rise came from investors paying more for each dollar of sales rather than from the business growing. Since August they have slipped back, even after a raised forecast.
Two dates follow closely. On 5 November Rockwell reports its year and gives fiscal 2027 guidance; on 18 November it holds its investor meeting, promising long-term targets. Both answer whether the growth the price assumes is on offer.
The evidence under this - 5 claims
- Management guides a flat fourth-quarter margin as memory and other costs rise (C39).
- In fiscal 2025 the company grew sales 1% against its own 4.8% bonus target (C35).
How we read the multiple
A buyer pays about 33 times the earnings per share management guides for this year, against a normal of about 26 times over six years. Yet adjusted earnings per share were $12.25 in fiscal 2023 and $10.53 in fiscal 2025.
- A common rule of thumb: a mature leader settles near 20 times earnings.
- At 20 times, today's price needs about $21.63 a share by fiscal 2031.
- From this year's guided $13.15, that is about 10.5% a year.
- Since fiscal 2023 they grew about 2.4% a year.
Against its own history. Investors pay well above the company's own normal, which says they treat this upturn as the start of a long run, not a cyclical rebound.
The evidence under this - 4 claims
The six-year median is struck on GAAP earnings, which run below adjusted EPS, and on fiscal 2027 consensus the multiple is 29 times, so the premium to the shares' own history is smaller than 40 against 26 suggests.
- Analysts already expect about 12% a year to fiscal 2028 (C26), so the growth the price needs is the consensus view.
- Rockwell has often traded above 20 times, so a lower ending multiple may be too harsh.
- Management guides a flat fourth-quarter margin as memory and other costs rise (C39).
- In fiscal 2025 the company grew sales 1% against its own 4.8% bonus target (C35).
Priced against its rivals
Only Emerson Electric sells the same thing to the same buyers as a large part of what it does. A price comparison needs at least two, so the price is judged against its own history instead.
Private or foreign rivals that cannot be priced: Siemens AG, ABB Ltd, Schneider Electric SA, Mitsubishi Electric Corp., Dassault Systemes.
Where we disagree with the market
A quality automation leader recovering and set to win as factories return to America.
The recovery is real but it rides data centres, chip plants and upgrades, not new factories, and the price already pays for it.
Rockwell's own call says large new-factory projects are being delayed by tariffs and uncertainty, and US factory building is down 19% from a year earlier. Analysts have been cooling too.
The evidence against us: if new-factory projects restart, the projects business and recurring sales could accelerate together, and a high price would then be justified. Even leaving out data centres and the business it sold, growth was still 8%.
What analysts say, and the evidence
The evidence under this - 5 claims
- Management also reports early signs of renewed project activity in automotive and life sciences (C43).
- US robot installations rose 12% in 2025 (C13), so some new-line spending is happening.
What could go wrong, and how we would know
The risks
- Factory spending turns down. Most sales follow plants building or upgrading lines; in fiscal 2024 sales fell 8.8% and the shares fell by about a third.
- Costs outrun prices. Price increases no longer covered costs in Q3 FY2026, and memory-chip inflation hits the controller business hardest.
- Two distributors carry a fifth. About 20% of sales go through the two largest distributors, so a change at either moves the numbers.
- Code that runs anywhere. Control software that runs on any hardware would weaken the reason plants stay; adoption is not measured anywhere.
- Recurring sales keep lagging. Recurring sales grew 6% against a double-digit promise, and those are the sales a high price most depends on.
The evidence under this - 6 claims
Management also expects price minus cost to turn positive in the fourth quarter and for the full year, after a late-quarter price rise.
An absent adoption figure is not evidence of no adoption; the association lists use cases across industries.
What we still do not know
- How much Rockwell sells to data centres; it discloses no figure, though management calls that business strong.
- Whether any plants are moving to hardware-independent control software, and how many.
- Whether delayed new-factory projects restart in fiscal 2027 or are cancelled.
The evidence under this - 4 claims
Rockwell discloses no data-centre sales figure, so the size of this business cannot be checked, and Schneider Electric and Vertiv are the established suppliers of data-centre power and cooling.
An absent adoption figure is not evidence of no adoption; the association lists use cases across industries.
No outside body publishes a comparable figure, and the $120B covers every region including those where sales fell in fiscal 2025 (C09).
- Management also reports early signs of renewed project activity in automotive and life sciences (C43).
- US robot installations rose 12% in 2025 (C13), so some new-line spending is happening.
What would change our view
- Neutral→AttractiveA price that pays for less than the plan
It needs:
- ○The shares fall to 24 times next year's expected earnings per share, from about 29 today.about $358.01 today, 17% below the last close
- Neutral→AttractiveThe project cycle returns
It needs all of:
- ○The services and projects business grows more than 5% in a quarter, before acquisitions.checked at the next results, due by 5 Nov
- ○Recurring sales grow 10% or more a year, before acquisitions.checked at the next results, due by 5 Nov
- Neutral→UnattractiveThe upturn stalls at this price
It needs any of:
- ○Fiscal 2027 guidance for earnings per share has a midpoint below $14.20.watched as it happens
- ○Fiscal 2027 guidance calls for sales growth below 4%, before acquisitions.watched as it happens
We would also be wrong if
- The controller and software business's margin falls below 28% for fiscal 2027.
- North American sales fall from a year earlier in two quarters running.
What is coming
- 5 November 2026 Q4 fiscal 2026 results and fiscal 2027 guidance: Next year's organic growth and adjusted EPS against the $14.91 consensus, and how memory costs hit Software & Control.
Every dated event ahead
- 5 November 2026 Q4 fiscal 2026 results and fiscal 2027 guidance: Next year's organic growth and adjusted EPS against the $14.91 consensus, and how memory costs hit Software & Control.
- 18 November 2026 Annual investor meeting at Automation Fair, Boston: New long-term growth and margin targets, and perhaps the size of the data-centre business.
- 5 February 2027 Q1 fiscal 2027 results: Whether Lifecycle Services and ARR grow again and whether price covers cost.
Since we wrote this
- 10 OctThesis writtenNeutral, medium convictionA strong factory-control franchise in a real upturn, riding data centres and upgrades rather than new factories, at a price that already pays for years of it.
Sources 19
Sources - 19
Every claim above cites one of these, or states the reasoning that derived it. The quote is frozen at the date it was read: a link can rot, and an agent fetch returns a reading of a page rather than the page. Backs counts the whole claim ledger, so it can name a claim this page does not surface.
- S01primarycompany filing2025-11-12business, segments, competitors, demand drivers, addressed market, distributors, regional sales, backlog, segment results, adjusted EPS, Sensia and asbestos charges, risk factors, officers and employeesbacksC01C02C03C08C09C10C15C17C22C23C24C28C29C35C36C38C41C42C46
- S02primarycompany filing2025-11-06fiscal 2025 results, ARR, free cash flow, the bonus note and fiscal 2026 guidance as first issuedbacksC06C24C31C35
- S03primarycompany filing2026-08-04quarterly sales, organic growth by segment and region, segment margins, enterprise operating profit, ARR, the balance sheet, cash flow and raised guidancebacksC04C05C06C07C09C15C19C24C26C27C28C30C31C36
- S04primarycompany filing2026-08-04revenue by type and region, performance obligations, debt, share count and repurchasesbacksC04C07C23C25C30C32
- S05primarytranscript2026-08-04Third quarter fiscal 2026 earnings call transcript (FMP), held 2026-08-04data/cache/transcripts/ROK-2026Q3.jsonend-market growth, greenfield delays, Logix units and share, data-centre uses, price and cost, memory inflation, capital spending and the fiscal 2026 outlook
While tariffs and geopolitical uncertainty continue to delay large greenfield projects, modernization spending remains strong.
backsC06C09C11C16C24C31C32C39C43C46C47 - S06primarycompany filing2025-12-22beneficial ownership, bonus metrics, targets and payout, and performance-share resultsbacksC24C34C35
- S07primarycompany filing2026-09-24Scott Genereux's retirement and the end of his chief revenue officer rolebacksC38
- S08primarycompany release2026-09-30the date and purpose of the investor meeting
The presentation will outline Rockwell’s long-term business strategy, including key areas of growth and longer-term financial targets.
backsC40 - S09primaryindustry data2025-05-28HMS Networks: annual industrial network market study, 2025 HMS Networks ABshares of newly installed factory network nodes by protocol, worldwide and by region
EtherNet/IP remains the leading protocol in North America, but adoption of smart device-friendly technologies like IO-Link, APL, and SPE is clearly growing
backsC14C15 - S10primarygovernment data2026-10-01US Census Bureau: Monthly Construction Spending, August 2026 US Census Bureaumanufacturing construction spending at a seasonally adjusted annual rate and its change on the year
Manufacturing 170,701 170,339 171,232 173,641 177,023 211,142 0.2 -19.2
backsC12 - S11primarygovernment data2026-10-01FRED: Total Construction Spending: Manufacturing in the United States (TLMFGCONS), annual average Federal Reserve Bank of St. Louis (Census data)annual averages of manufacturing construction spending, 2019 to 2025
observation_date,TLMFGCONS 2019-01-01,81009 ... 2023-01-01,202151 2024-01-01,244093 2025-01-01,215365
backsC12 - S12primaryindustry data2026-09-24International Federation of Robotics: U.S. now second-largest robotics market (World Robotics 2026) International Federation of RoboticsUS industrial robot installations in 2025
The United States installed 38,400 industrial robots in 2025, marking a 12% year-on-year increase.
backsC13 - S13primaryindustry data2026-10-10UniversalAutomation.org: what is universal automation UniversalAutomation.orgthe association's aim of hardware-independent control software on IEC 61499
For far too long proprietary automation systems have been restricting innovation.
backsC18C19 - S14primarycompany filing2025-11-10Emerson Electric Co. Form 10-K for the fiscal year ended September 30, 2025 Emerson Electric Co.Emerson's automation segments and the control systems it sells
The Discrete Automation segment includes solenoid valves, pneumatic valves, valve position indicators, pneumatic cylinders and actuators, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems and software
backsC20 - S15primarycompany filing2026-02-17Honeywell International Inc. Form 10-K for 2025 Honeywell International Inc.Honeywell's sales by business, including Process Solutions
Process Solutions | 6,165 | 6,111 | 6,017 | Warehouse and Workflow Solutions | 933 | 914 | 1,443 | Net Industrial Automation sales | 9,401
backsC21 - S16secondaryvendor data2026-10-10Research pack frozen beside this thesis, 2026-10-10content/ROK/research-pack.jsonthe 9 October close, the 252-day return and its decomposition, estimates, the rating split and its history, valuation series, headcount, insider statistics and FINRA short interestbacksC25C26C27C28C42C45
- S17secondaryvendor data2026-10-10daily closes around each results datebacksC44
- S18primarycompany filing2026-10-10Rockwell Automation XBRL company facts, fiscal 2020 to 2026, frozen as content/ROK/financials.jsoncontent/ROK/financials.jsonannual revenue, SG&A, engineering and development, share pay, capital spending, operating cash flow and diluted sharesbacksC03C25C32C33C41
- S19primarycompany filing2026-10-10Form 4 filings by Rockwell insiders, October 2025 to October 2026 (read by scripts/insider_fetch.py)every open-market insider sale and its Rule 10b5-1 flagbacksC37