Rockwell Automation: Growth Tailwinds Meet Valuation Challenges

Solid Results Despite Weak CapEx

Rockwell Automation keeps posting solid earnings despite global macroeconomic challenges.
Higher rates and tariffs limit CapEx investments worldwide.
Revenue growth misses the company’s long-term 6%–9% target.
Yet Rockwell shows resilience through efficiency gains and strategic moves.

Moat Expands with Software and Recurring Revenue

Rockwell strengthens its moat through software integration and subscription-based revenue.
Strong customer switching costs further support its competitive advantage.
Strategic acquisitions and partnerships enhance its long-term positioning.
Efficiency initiatives already delivered $250 million in cost savings.

Q3 2025 Performance

Rockwell reached its productivity savings goal one quarter early.
That achievement boosted margins and lifted EPS above analyst expectations.
Sales climbed nearly 5% year-over-year in fiscal Q3 2025.
Annual recurring revenue grew 7% year-over-year, showing strong momentum.
North America led growth, delivering nearly two-thirds of company revenue.

Mixed End-Market Demand

Discrete industries such as automotive and semiconductors showed strong demand.
Warehouse automation delivered robust growth as logistics firms boost productivity.
Rockwell invests heavily in robotics and logistics automation solutions.
The Clearpath Robotics acquisition expanded its autonomous mobile robot offering.
Hybrid markets like food, beverage, and life sciences remained resilient.
However, process industries struggled due to commodity volatility and overcapacity.

Valuation Concerns Remain

Rockwell reported Q3 diluted EPS of $2.60 and adjusted EPS of $2.82.
Cost reductions offset higher compensation expenses and currency headwinds.
Despite execution strength, valuation appears stretched compared to growth.
Any macro setback could hurt the stock given its premium pricing.