Yahoo Finance Is Rockwell Automation, Inc. (NYSE:ROK) Potentially Undervalued?
Rockwell Automation, Inc. (NYSE:ROK) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$295 at one point, and dropping to the lows of US$255. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Rockwell Automation's current trading price of US$256 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Rockwell Automation’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Rockwell Automation
What's The Opportunity In Rockwell Automation?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.71% above our intrinsic value, which means if you buy Rockwell Automation today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $254.11, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Rockwell Automation’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Rockwell Automation generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 43% over the next couple of years, the future seems bright for Rockwell Automation. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in ROK’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on ROK, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 1 warning sign for Rockwell Automation you should be aware of.
If you are no longer interested in Rockwell Automation, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
