Yesterday, Rockwell Automation Inc. (ROK) announced new manufacturing solutions, which are supposed to help the company save up to $6 billion a year, or about 10% of the total industrial electrical energy costs by taking advantage of “Smart Grid” initiatives along with existing technologies.
The new manufacturing portfolio includes a series of plant-wide energy optimization tools that create an integrated industrial energy management system based on Rockwell Automation industrial automation and information technology. It also will allow manufacturers to perform real-time load-balancing of their industrial processes, bring renewable energy sources online and execute demand response strategies connected to the Smart Grid.
Rockwell is well-positioned for long-term growth based on its strong global market presence. However, we remain cautious due to the lack of near-term visibility. The company’s revenues depend on the level of global or regional industrial production and the financial performance of its user industries.
All matured markets are expected to witness a negative GDP growth in the near term. There has been a slowdown in industrial equipment spending in the last few quarters, which is not expected to recover in the near term. This is adversely impacting Rockwell’s revenues. We expect the uncertainty in the global economy to continue for the rest of fiscal 2009, which increases the possibility of capex cuts by Rockwell customers.
Another concern is the recent dramatic strengthening of the U.S. dollar. Rockwell’s top-line will be hampered further if the rates stay at current levels. Management expects currency translation to have a negative impact of 7% on revenues for the current fiscal year. Thus, we rate the shares of Rockwell as Underperform.
Read the full analyst report on “ROK”
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