ROK

We rate ROCKWELL AUTOMATION, INC (ROK) as a Buy with a composite score of 67.4/100 at a current price of $405.30. The stock scores above average across the majority of our six quantitative factors and ranks #180 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in quality (87th percentile) and value (83th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (46/100), High uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ROCKWELL AUTOMATION, INC holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 67.4/100 places it at rank #180 in our full 7,333-stock universe. With a $39.3B market capitalization, ROCKWELL AUTOMATION, INC operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 3% and favorable momentum (61th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 42% (-0.5pp vs sector) narrow to operating margins of 16% (+14.4pp vs sector) and net margins of 12.5%, yielding a gross-to-net conversion rate of 30%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $405.30, ROCKWELL AUTOMATION, INC appears undervalued relative to its fundamentals. Our value factor score of 83/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 43.9x (a 97% premium to the sector median of 22.3x), EV/EBITDA of 34.8x (at a premium), P/B of 11.8x, P/S of 5.5x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to ROCKWELL AUTOMATION, INC. Key risk factors include significant leverage (196% debt-to-equity), elevated valuation multiple (P/E 43.9x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (196% debt-to-equity); elevated valuation multiple (P/E 43.9x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 75th percentile and quality factor at the 87th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 42% provide a buffer against cost pressures; above-average stability (75th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate ROCKWELL AUTOMATION, INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 26.9%, and the balance sheet is managed within acceptable parameters (D/E: 196%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; ROCKWELL AUTOMATION, INC falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 1.50% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, ROCKWELL AUTOMATION, INC receives a Buy rating with a composite score of 67.4/100 (rank #180 of 7,333). Our quantitative framework assigns a Narrow Moat (46/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 72/100.

Our analysis supports a constructive view on ROCKWELL AUTOMATION, INC. The combination of identifiable competitive advantages, high uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.