Rockwell Automation, Inc. (ROK): what the price requires

At today's price, Rockwell Automation, Inc. (ROK) is priced for today's economics sustained for ~8.8 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ROK

Headline

FieldValue
TickerROK
CompanyRockwell Automation, Inc.
Current price$460.34/sh
CompositionIntelligent Devices 45% / Software & Control 29% / Lifecycle Services 26%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed36.1%
Operating margin today20.0%
Margin expansion implied+16.1pp
Must persist for8.8y
Multiple paid32x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.

Reconcile: at the x-ray's 9.3% required return this reads ~6.6 years; the models below use their own rates.

How unusual the bet is: elevated

ReferenceValue
cohort percentile (of 177 peers)58
sustained it ~8.8 years at this level17%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset3.64x4expensive
Earnings4.60x4expensive
Relative2.02x5expensive
Growth1.02x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.

Per-Model Detail (n=16)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$334.621.38xyesFCF base $1.4B, growth 11% (input: historical growth), terminal g 4.0%, WACC 8.6%, 6yr projection
DCF Exit MultipleGrowth$537.410.86xyesExit EV/EBITDA: 47.4x / 49.4x / 51.4x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$243.271.89xyesP/E 26.89x (blended: static sector reference 18x + trailing (TTM) 48x), scenarios: 22.4x / 26.9x / 31.4x (bear / base = reference held flat / bull), EV/EBITDA 23.22x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$104.464.41xyesBV/sh $31.28, ROE (TTM) 30.9%, ke 9.3%
Two-Stage Excess ReturnAsset$198.112.32xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$452.421.02xyesRev $8.8B, growth 11% (input: historical growth; tapered), Terminal P/S: 4.9x / 5.9x / 6.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$228.142.02xyesEPS $9.63, growth 24% (input: historical EPS growth), PEG=2.01 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.0146033.50xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.38B × (1−20%) / WACC 8.6% → EPV (no growth) (excluded from median)
Residual IncomeAsset$159.992.88xyesBV $31.28 + 5yr PV of (ROE (TTM) 30.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$82.325.59xyes√(22.5 × EPS $9.63 × BVPS $31.28) — Graham's conservative floor
EV/EBITDA RelativeRelative$87.455.26xyesEBITDA $1.12B × sector EV/EBITDA 12.0x
FCF YieldEarnings$96.334.78xyesFCF $1339.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$88.075.23xyesSBC-adj FCF $1.25B (FCF $1.34B − SBC $0.09B) capitalized at Kₑ
Ben Graham FormulaEarnings$310.731.48xyesEPS $9.63 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$21.4321.48xyesBV $31.28 × (ROIC 5.9% / WACC 8.6%) (excluded from median)
P/Sales SectorRelative$195.472.36xyesRevenue $8.80B × sector P/S 2.5x
PEG Fair ValueRelative$342.211.35xyesEPS $9.63 × (PEG 1.5 × growth 23.7% (input: historical EPS growth)) → PE 35.5x
Earnings YieldEarnings$104.114.42xyesEPS $9.63 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.3b
Net debt / NOPAT (after-tax)2.41x
Net debt / operating income (pre-tax)1.92x
Interest coverage11.4x
Share count CAGR (buyback)-1.0%
Burning cashno

Bullet Takeaways

Bull Case

The counterintuitive part of Rockwell is that its weakest recent year was the hardware its name is built on. The 10-K reports "Intelligent Devices reported and organic sales decreased 1 percent in 2025 compared to 2024", with every region down. And yet the stock trades at roughly 33 times operating income, because the bet is not on the drives and controllers. It is on the layer above them. Software & Control was $2,187M of the $8,264M FY2024 sales base, and it is where the recurring, higher-margin revenue lives. Rockwell is being priced as a software-and-services company that happens to ship a lot of metal.

The automation install base is the moat, and it is the kind that compounds quietly. A plant that standardizes on Rockwell controllers does not rip them out; it buys the next layer, the software, the analytics, the lifecycle service contract. The 10-K describes revenue recognized over time as performance obligations are satisfied, the signature of multi-year service and software relationships rather than one-time box sales. That is why a soft hardware year did not break the thesis. The customer relationship outlives any single product cycle.

The demand picture turned in early 2026. Q2 FY2026 sales reached $2,239 million, up 12% year over year, with organic sales up 9%, and the company posted double-digit growth in orders, sales, and earnings led by North America and accelerating demand in data centers, semiconductors, and e-commerce. Gross margin expanded over 160 basis points to above 50% on volume, productivity, and mix. Management raised full-year guidance to about $8.9 billion of revenue and adjusted EPS of $12.50 to $13.10. The data-center and semiconductor build-out is exactly the kind of secular capital cycle that runs years, not quarters, and Rockwell sits inside the wiring of it.

Bear Case

Industrial automation runs on the capital-spending cycle of everyone else, and the difference between peak earnings and sustainable earnings is the whole bear case. The 10-K names the dependency directly, citing "the cyclical nature of our customers' capital spending" alongside tariffs, trade controls, and sovereign debt as the forces that move the business. Factories and data centers buy automation in waves. When the wave that is lifting 2026, the data-center and semiconductor build-out, crests, organic growth does not fade gracefully; it inverts, the way Intelligent Devices already did in 2025 with a 1% decline and every region down.

That matters because of what the price requires. At today's level the market is paying about 33 times operating income, which embeds company-wide operating growth held near its self-funding ceiling for roughly nine years. Rockwell earns about a 19% operating margin today; the price implies a path toward the mid-30s. The asset-value methods, the earnings-power methods, and the peer-multiple methods all read the price as expensive, several of them at two to five times where they land. Only the forward-growth models reach it, and they get there by crediting a long durable compounding the static frames structurally cannot see. If the order momentum proves cyclical rather than secular, the multiple has a long way to fall before the value methods catch it.

The balance sheet is sound but not a fortress that erases the cyclicality. Net debt of about $3.26 billion sits near 1.9 times operating income, with interest covered roughly 11.6 times, and the share count has drifted down about 1% a year, so capital return is real and the company is not burning cash. The risk is not solvency. It is that Rockwell also leans on acquisitions to feed Software & Control, and the 10-K flags "difficulties in integrating the purchased or new operations, technologies, products or services, retaining customers, and achieving the expected benefits of the transaction". A premium priced for durable compounding has little tolerance for an integration that disappoints into a down cycle.

Valuation

Start with what the price is paying for. At $474 (June 28, 2026) the market values Rockwell at roughly 33 times operating income, and inverted, that price asks company-wide operating income to grow near its self-funding ceiling for about nine years. The company has shown a 19% operating margin; the price implies a march toward the mid-30s. Set against the company's own segment economics, where FY2024 sales split $3,804M Intelligent Devices, $2,187M Software & Control, and $2,273M Lifecycle Services, that is a bet that the software-and-services mix keeps shifting the blended margin structurally higher.

The methods disagree in a clean pattern. Asset-value, earnings-power, and peer-multiple approaches all read the price as rich, several landing well below it; the peer-multiple lens sits at roughly half the price, and the earnings-power lens lower still. Only the forward-growth methods reach the price, and they reach it the way such methods do, by holding today's elevated multiple flat across the forecast. The relative-valuation read, for instance, blends a sector multiple near 18 times against a trailing multiple near 49 times. So the entire premium rests on one question: is this durable compounding the static frames cannot price, or a multiple the market is paying ahead of the cycle.

Solvency bounds the downside without resolving it. Net debt of about $3.26 billion is roughly 1.9 times operating income, interest is covered about 11.6 times, and the share count has fallen about 1% a year, so the floor under a cyclical air pocket is firm. What that floor does not do is shorten the distance between today's price and where the value methods land. The order acceleration in data centers and semiconductors is the variable that decides which read is right, and it is the one to watch print by print.

Catalysts

The most recent print reset the trajectory. Q2 FY2026 sales were $2,239 million, up 12% year over year with organic growth of 9%, and adjusted EPS of $3.30 beat the roughly $2.88 expected, a double-digit surprise. The driver was order strength, double-digit order growth led by North America and by accelerating demand in data centers, semiconductors, and e-commerce, with gross margin expanding more than 160 basis points to above 50% on volume, productivity, and favorable mix.

Management responded by raising the full-year outlook to reported and organic sales growth of 5% to 9%, about $8.9 billion of revenue, and adjusted EPS of $12.50 to $13.10. The guidance raise is the catalyst that matters, because it tells the market the order momentum is being underwritten into the back half rather than treated as a one-quarter pop.

What to watch from here is whether order growth holds as the data-center and semiconductor build-out matures, and whether Software & Control keeps gaining share of the mix. Those two threads decide whether the secular read or the cyclical read wins, and the next few prints will carry the answer.

Peer Cohorts (Per Segment, With Filing Citations)

Intelligent Devices (reported)

Software & Control (reported)

Lifecycle Services (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Rockwell Q2 FY2026 earnings release, May 2026

View the full interactive ROK report on boothcheck