Rockwell Automation is a global industrial automation and control systems company that combines durable gross margins with conservative leverage and consistent cash generation.
The company shows notable strengths in margin and cash conversion: gross margin has been stable around 41.0% (most recent 41.0% at 2023-09-30) and operating margin remains elevated at 18.7% (2023-09-30), supporting an average net margin near 13.1% (latest available 13.1% at 2017-09-30) per Profit Margin Trends. Cash generation is also a positive: trailing twelve‑month operating cash flow was $863.8M (period end 2024-09-30) and the business has an average operating cash flow to net income conversion of 1.2523 (meaning OCF has historically exceeded reported earnings), with a free cash flow margin of 11.57% (0.1157) — relevant context for Earnings Quality Analysis.
Capital structure metrics point to conservative leverage: debt-to-equity of 0.2303 and interest coverage around 7.02x, with reported net debt effectively zero in the signal set. Revenue has also stepped up to $9.06B (period ended 2023-09-30), showing scale in the top line per Revenue & Net Income.
Return on equity has weakened markedly to 8.9% (period end 2025-12-31) after a history of much higher ROE readings, and measured ROE growth is negative (-0.7979), which signals a deterioration in shareholder return trends shown in Return on Equity (ROE). Operating profitability has narrowed from 21.8% in 2021-09-30 to 18.7% in 2023-09-30, and reported net income has been lumpy — the most recent quarterly net income fell to $305.0M (2025-12-31) even as TTM net income reached $990.0M (period end 2025-12-31) — producing a recent situation where reported earnings outpaced the last reported OCF ($863.8M), which merits attention in the Earnings Quality Analysis.
Financing cash flows have been persistent outflows (TTM -$891.0M), and investing cash flow swung from +$854.3M (2023-09-30) to -$982.5M (2024-09-30) before moderating to -$216.0M (2025-09-30), highlighting variability in Strategic Capital Allocation.
Key fundamentals to monitor include the operating cash flow versus net income relationship (OCF TTM $863.8M vs Net Income TTM $990.0M), trends in operating margin (most recent 18.7%), the trajectory of ROE (current 8.9%), and top-line progression from the $9.06B revenue level; tracking these alongside capital allocation flows (financing outflows TTM -$891.0M and recent investing cash flow changes) will be important context for the items summarized above. Refer to EPS Diluted & Revenue per Share, Revenue & EPS Growth, and Price-to-Earnings (PE) Ratio Trend for complementary metrics to track.
The foundation of business quality and long-term value creation
ROCKWELL AUTOMATION, INC.'s revenue data in the chart shows an upward move in the most recent available series, rising from $7.00B (period ended 2021-09-30) to $9.06B (period ended 2023-09-30). That top-line series indicates a step-up in reported revenue by the 2023 period compared with the earlier 2021 figure shown.
Net income has been more variable across the history presented, including a loss of $-236.4M in the quarter ended 2017-12-31 and multiple multi-hundred-million-dollar profit quarters thereafter. In the most recent sequence, net income increased from $184.0M (2024-12-31) to $685.0M (2025-09-30) before declining to $305.0M in the quarter ended 2025-12-31.
The most recent reported revenue was $9.06B (period ended 2023-09-30) and the most recent reported net income was $305.0M (period ended 2025-12-31).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Oct 2022 to Sep 2023, Rockwell Automation Inc converts approximately 41¢ of every revenue dollar into gross profit (gross margin: 41.0%).The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Oct 2022 to Sep 2023
Analyzing long-term margin stability and competitive positioning
ROCKWELL AUTOMATION, INC’s gross margin has been broadly stable in the available series, around the low-40% range, moving from 41.4% (2021-09-30) to 41.0% (2023-09-30). Over the same recent interval, operating margin shows a clearer decline, falling from 21.8% (2021-09-30) to 18.7% (2023-09-30), indicating a narrowing of operating profitability in the most recent quarters of the dataset.
Net profit margin data in the series ends earlier; the latest available net margin is 13.1% at 2017-09-30, which is higher than several earlier readings in 2010–2013 that ranged roughly 9–12%. The most recent Gross Margin was 41.0% (2023-09-30), the most recent Operating Margin was 18.7% (2023-09-30), and the most recent Net Profit Margin was 13.1% (2017-09-30).
Understanding Profit Margins
Between Oct 2022 and Sep 2023, Rockwell Automation Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
ROCKWELL AUTOMATION, INC’s trailing-twelve-month net income has risen in the most recent quarters, from $869.0M at to $990.0M at . Operating cash flow on a TTM basis, last reported at , stands at $863.8M.
Over the multi-year history shown, operating cash flow was higher than net income in the 2016–2017 period (commonly around $1.03B–$1.20B versus net income in the $700M–$830M range), while the most recent data show net income exceeding the last reported operating cash flow.
The notable inflection is the reversal from earlier periods where operating cash flow exceeded earnings to the more recent quarters where reported net income outpaced operating cash flow. This creates a current gap between earnings and the most recently reported operating cash generation.
The most recent Net Income (TTM) was $990.0M ().
The most recent Operating Cash Flow (TTM) was $863.8M ().
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
ROCKWELL AUTOMATION, INC's trailing twelve-month ROE shows a marked decline into the most recent quarter. The latest reported ROE is 8.9% (period end 2025-12-31), which is well below the multi-year cluster of elevated ROE readings in the 30–47% range that predominate across 2010–2015 and again in several 2016–2017 quarters. Notable inflection points in the series include a trough at 13.0% on 2016-06-30, a sharp peak at 172.1% on 2019-09-30, and the current low relative to the earlier historical range.
The data set includes long stretches of historically strong ROE interspersed with occasional large swings; the most recent value sits materially below those earlier levels. The most recent ROE (period end 2025-12-31) was 8.9%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
ROCKWELL AUTOMATION, INC. has shown a sustained positive operating cash flow in the trailing twelve-month data, with the most recent reported operating cash flow at $863.8M (period end 2024-09-30).
Investing cash flow has exhibited a clear inflection: it was positive $854.3M at period end 2023-09-30, swung to a large outflow of -$982.5M by 2024-09-30, and then moved back toward smaller outflows, arriving at -$216.0M in the latest available period (2025-09-30).
Financing cash flows have been net outflows across the reported history, with substantial variability — examples include -$1.68B (2023-09-30), -$1.44B (2023-12-31), -$502.8M (2024-09-30), and -$891.0M (2024-12-31).
Most recent values observed in the dataset are:
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.