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Rockwell Automation is a high-quality, pure-play industrial automation and digital transformation provider. High switching costs and mission-critical systems provide a strong moat, though near-term cyclicality and a premium valuation warrant caution. Fair value range: low $126, high $199, with mid-point at $162.
Stock analysis

ROK fair value $126–$199

By StockMarketAgent.AI team· supervised by
Analyzed: 2026-05-13Next update: 2026-08-13Methodology v2.5Review: automatedArchetype: Mature dividend
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Last price
$455.08
▼ -292.95 (-64.37%)
Fair value
$162
$126–$199
Rating
Sell
confidence 88/100
Upside
-64.4%
upside to fair value
Margin of Safety
$137.81
MoS level · 15%
Market Cap
$50.6B
P/E fwd 31.5

§1 Executive summary

  • High-quality business with strong moats and solid 15.1% ROIC.
  • Profound valuation disconnect: Reverse DCF implies 18.8% growth vs 4.45% base reality.
  • Fair value of $162.13 implies a -64.37% downside as 31x forward PE mean-reverts to 18x.
Fair value
$162
Margin of safety
-180.7%
Confidence
88/100
Moat
6.4/10

Educational analysis only — not financial advice. Always do your own due diligence.

$455.08Price
Low $125.97
Mid $162.13
High $199.06

Rockwell Automation is a high-quality, pure-play industrial automation and digital transformation provider. High switching costs and mission-critical systems provide a strong moatMoatA durable structural advantage that protects long-term returns on capital from competition. Sources include network effects, switching costs, intangible assets, cost advantages, and efficient scale., though near-term cyclicality and a premium valuation warrant caution.

  • High switching costs for mission-critical
    High switching costs for mission-critical automation systems.
  • Deeply embedded control and visualization
    Deeply embedded control and visualization software ecosystems.
  • Cycle upside
    Accelerated reshoring, nearshoring, and aging demographics drive structural demand for factory automation.

§2 Bear case

A prolonged industrial recession or delayed capexCapital expendituresCash spent on acquiring or upgrading property, plant, and equipment. Splits into maintenance capex (sustaining current capacity) and growth capex (expanding capacity). spend by discrete and process end-markets directly hits the top-line, exposing the extreme multiple disconnect.

Ways this thesis can break

Valuation Mean Reversion

· High

The market realizes the 18.8% implied growth rate is unattainable and the multiple compresses from 31x to the historical 18x average.

FV impact
-50%

Severe Capex Contraction

· Medium

Discrete and process end-markets delay automation and reshoring investments due to a prolonged macroeconomic recession.

FV impact
-30%

Margin Degradation

· Low

Intense competition from Siemens and ABB forces pricing pressure, preventing the expected software mix margin expansion.

FV impact
-15%
Early-warning signals to monitor
MetricCurrentTrigger threshold
Quarterly operating margins dropping below 18%.MonitorDeterioration versus the report thesis
Forward 12-month private revenue estimate reference missing double-digit growth expectations.MonitorDeterioration versus the report thesis
Deceleration in Software & Control segment growth.MonitorDeterioration versus the report thesis
Rising days sales outstanding (DSO) or inventory buildup.MonitorDeterioration versus the report thesis
Cancellation or delays of major reshoring factory builds.MonitorDeterioration versus the report thesis

§3 Financial history

Income statement — last six periods
Line itemT−0T−1T−2T−3CAGR
Period2022-09-302023-09-302024-09-302025-09-30Trend
Revenue$7.76B$9.06B$8.26B$8.34B+2.4%
Gross profit$3.10B$4.42B$3.85B$4.02B+9.0%
Operating income$1.34B$1.69B$1.19B$1.42B+2.1%
Net income$932.2M$1.39B$953.0M$869.0M-2.3%
EPS (diluted)$7.97$11.95$8.28$7.67-1.3%
EBITDA$1.44B$1.99B$1.57B$1.40B-0.9%
R&D—$706.0M$658.0M$679.0M-1.3%
SG&A$1.77B$2.02B$2.00B$1.91B+2.7%

Quality scores

OCF / Net income
1.78×
>1 indicates high earnings quality
Accounting quality gate
Fail
Sector-adjusted gate
ROIC
11.6%
Return on invested capital
§3

Numbers analysis

Cash flow

Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.

Capital allocation

Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.

Individual subscribers — §4 onwards11 more sections

Read the full analysis — 11 more sections.

Competitive moat, industry cycle, peer comparison, intrinsic valuation, sensitivity, scenarios, earnings decision tree, position management, investor perspectives, scorecard, and final recommendation.

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INCOME STATEMENT FAQ

ROK income statement questions

  1. Our financial-history view of ROK (ROK) covers revenue, gross profit, operating income, and net income across the past five fiscal years, with year-over-year growth and margin context for each line.

FAQ

ROK — frequently asked questions

  1. Based on our latest analysis, ROK looks meaningfully overvalued. The current price is $455 versus a composite fair-value midpoint of $162 (range $126–$199), which implies roughly 64.4% downside to the midpoint.

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