Rockwell Automation Inc (ROK)

Conclusion

Rockwell Automation provides industrial automation and digital transformation solutions through three segments: Intelligent Devices, Software & Control, and Lifecycle Services. On 2026-11-09 the shares were priced at 389.36 USD, giving a market capitalisation of 43.2 billion USD.

The verdict is overvalued. The P/E of 30.7 sits close to its ten-year median of 31.1, and EV/EBITDA of 21.7 matches its median of 21.7, but price-to-sales of 4.81 is above its median of 3.87. The DCF gives 180.64 USD per share at a discount rate of 12.47%. The fair value band runs from 227.68 to 341.52 USD with a midpoint of 284.60 USD, a margin of safety of -26.9% at the current price. The reverse DCF implies growth of 15.7%, against revenue growth of 5.1% and free cash flow per share growth of 9.3% over five years.

What supports the case: free cash flow conversion of 120.7% over the trailing twelve months, an operating margin of 19.7% against a ten-year median of 17.2%, and a net debt to EBITDA of 1.46x. What would break it: revenue growth of -0.3% over three years, EPS growth of 1.6% over three years, and a margin of safety of -26.9% against a midpoint of 284.60 USD.

Financial health

Financial health is green, held up by the current ratio, net debt to EBITDA and interest coverage, all assessed as good. At 30 September 2026 the current ratio was 2.11 and the quick ratio 1.35, net debt to EBITDA was 1.46x, interest coverage was 13.6x, and debt to equity was 1.00. The Altman Z-score is not available because some of the inputs it needs are missing. Insolvency risk: low, about 1.1% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, supported by free cash flow conversion and the falling share count, both assessed as good. Free cash flow conversion was 120.7% over the trailing twelve months and 100.8% over five years, and the accrual ratio was -4.9%. The share count fell at a compound rate of 0.9% over five years, which points to buybacks. Free cash flow after stock-based compensation was 1.70 billion USD, but the stock-based compensation figure itself is not available. The company passed 7 of the 8 Piotroski tests it could be evaluated on. The Beneish M-score reading is not available. The company beat earnings estimates in all 8 of the last 8 quarters, with an average surprise of 10.4%. Current-year estimates rose by 1.3% over 90 days, while next-year estimates rose by 0.5%.

Profitability

Profitability is green, with margins above their ten-year medians and returns clearly above the cost of capital. The gross margin is 50.0% against a median of 46.8%, the operating margin 19.7% against 17.2%, and the net margin 15.7% against 12.6%. Operating margin stability is 15.7%. ROIC is 22.8% against a WACC of 11.8%, a ROIC minus WACC value of 10.9%, and the five-year median ROIC is 15.6%. The DuPont split shows that leverage plays a large part in the return on equity of 39.7%: the net margin is 15.7%, asset turnover 0.80, and the equity multiplier 3.17. The return on equity is therefore inflated by the equity multiplier, and ROIC is the sounder measure.

Growth

Growth is green, although the underlying growth rates are modest. Revenue grew at a compound rate of -0.3% over three years, 5.1% over five years and 4.3% over ten years. EPS grew at 1.6% over three years, 1.6% over five years and 8.5% over ten years. Free cash flow per share grew at 13.1% over three years, 9.3% over five years and 9.1% over ten years. Revenue rose in 8 of the last 10 years. Analysts expect EPS growth of 11.5% next year, which is assessed as good.

Valuation

Valuation is red: the verdict is overvalued, and the margin of safety is assessed as bad. The P/E of 30.7 is at a premium of -1.2% to its ten-year median of 31.1, EV/EBITDA is at a premium of 0.2% to 21.7, P/FCF is at a premium of -9.7% to 28.2, P/S is at a premium of 24.4% to 3.87, and P/B is at a premium of 0.5% to 12.1. The DCF gives 180.64 USD per share at a discount rate of 12.47%, with a terminal growth rate of 2.5%, and the terminal value makes up 41.2% of it. The fair value from historical multiples is 388.56 USD. The fair value band runs from 227.68 to 341.52 USD with a midpoint of 284.60 USD. The reverse DCF implies growth of 15.7%, against revenue growth of 5.1% and free cash flow per share growth of 9.3% over five years. The dividend yield is 1.4%, with a payout of 36.3% of free cash flow.

Risks

The weakest numbers are the three-year revenue growth of -0.3%, the three-year EPS growth of 1.6%, and the price-to-sales premium of 24.4%. If revenue keeps stalling, the growth needed to support the price of 389.36 USD, implied at 15.7%, becomes harder to reach. Since the DCF terminal value makes up 41.2% of the DCF, the 180.64 USD estimate depends on long-term assumptions and should be read with caution. The stock-based compensation figure, the Altman inputs and the Beneish reading are not available. This analysis does not include a debt maturity schedule or revenue by segment, so it cannot test refinancing needs or see where growth comes from.