By Christopher Hinton
Shares of Rockwell Automation (ROK) jumped Wednesday after the
company released first-quarter results and a lower full-year
outlook that were in line with analysts' expectations, providing
some relief that stability is returning to the roiled industrial
sector.
"While there are signs that economic and market conditions may
be stabilizing, it is still too early to call a bottom," said
company Chairman Keith Nosbusch. "We believe that the steepest
sequential declines are behind us, but markets remain uncertain and
our revenue trends are mixed across the regions."
Shares of Milwaukee-based Rockwell Automation recently rose
10.4% to $33.03. The stock is down about 30% since mid-September,
but is up nearly 70% since hitting a six-year low on March 5 of
$17.50 a share.
The industrial sector has been under the hammer for the last six
months after global credit markets dried up, leading to a
recession. Some investors had doubts the company would even be
profitable in the first quarter, said Eli Lustgarten, an analyst
with Longbow Research.
"This is possibly a relief rally," he said.
For the recent quarter, Rockwell Automation said earnings fell
72% to $40.6 million, or 29 cents a share, in its fiscal second
quarter, compared to $142.8 million, or 96 cents a share, in the
year-ago period.
Sales fell 25% to $1.1 billion as organic sales declined 18%. A
negative foreign-exchange rate contributed 7 percentage points to
the total decline.
Analysts polled by FactSet Research expected earnings of 29
cents a share in the most recent quarter on sales of $1.1
billion.
For 2009, Rockwell Automation cut its earnings forecast to the
range of $1.40 to $1.70 a share, compared to its prior outlook of
$1.55 to $2.25 a share given in February.
This was the second time this year the company has had to reduce
its outlook.
Wall Street is looking for fiscal-year earnings of $1.83, on
average.
Free cash flow from continuing operations in the second quarter
was $152.1 million versus $31.8 million last year due to working
capital reductions, as well as lower capital expenditures and a
refund related to a contractual tax matter, the company said.
-Christopher Hinton; 415-439-6400; AskNewswires@dowjones.com