Intrinsic value of Rockwell Automation - ROK

Previous Close

$164.03

  Intrinsic Value

$196.40

stock screener

  Rating & Target

hold

+20%

  Value-price divergence*

-7%

Previous close

$164.03

 
Intrinsic value

$196.40

 
Up/down potential

+20%

 
Rating

hold

 
Value-price divergence*

-7%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ROK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 21.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -6.79
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
Revenue, $m
  5,880
  6,345
  6,827
  7,329
  7,850
  8,392
  8,956
  9,542
  10,151
  10,785
  11,446
  12,134
  12,851
  13,599
  14,379
  15,193
  16,043
  16,932
  17,860
  18,831
  19,846
  20,909
  22,020
  23,184
  24,403
  25,680
  27,017
  28,419
  29,888
  31,427
  33,042
Variable operating expenses, $m
 
  3,621
  3,888
  4,166
  4,454
  4,755
  5,066
  5,391
  5,728
  6,080
  6,445
  6,719
  7,116
  7,530
  7,962
  8,413
  8,884
  9,376
  9,890
  10,427
  10,990
  11,578
  12,193
  12,838
  13,513
  14,220
  14,960
  15,736
  16,550
  17,402
  18,296
Fixed operating expenses, $m
 
  1,649
  1,690
  1,733
  1,776
  1,820
  1,866
  1,913
  1,960
  2,009
  2,060
  2,111
  2,164
  2,218
  2,273
  2,330
  2,389
  2,448
  2,509
  2,572
  2,637
  2,702
  2,770
  2,839
  2,910
  2,983
  3,058
  3,134
  3,212
  3,293
  3,375
Total operating expenses, $m
  4,936
  5,270
  5,578
  5,899
  6,230
  6,575
  6,932
  7,304
  7,688
  8,089
  8,505
  8,830
  9,280
  9,748
  10,235
  10,743
  11,273
  11,824
  12,399
  12,999
  13,627
  14,280
  14,963
  15,677
  16,423
  17,203
  18,018
  18,870
  19,762
  20,695
  21,671
Operating income, $m
  943
  1,075
  1,249
  1,431
  1,620
  1,817
  2,023
  2,238
  2,462
  2,696
  2,941
  3,304
  3,571
  3,851
  4,143
  4,450
  4,771
  5,108
  5,461
  5,831
  6,220
  6,628
  7,057
  7,507
  7,980
  8,477
  8,999
  9,548
  10,125
  10,732
  11,370
EBITDA, $m
  1,115
  1,264
  1,444
  1,633
  1,829
  2,033
  2,246
  2,469
  2,701
  2,943
  3,196
  3,460
  3,737
  4,026
  4,329
  4,646
  4,978
  5,326
  5,691
  6,074
  6,476
  6,898
  7,341
  7,806
  8,295
  8,808
  9,348
  9,915
  10,511
  11,138
  11,797
Interest expense (income), $m
  0
  53
  66
  79
  93
  108
  123
  138
  155
  171
  189
  207
  226
  246
  267
  289
  311
  335
  359
  385
  412
  440
  470
  501
  533
  567
  602
  639
  678
  719
  761
Earnings before tax, $m
  943
  1,022
  1,183
  1,351
  1,527
  1,710
  1,901
  2,100
  2,308
  2,525
  2,752
  3,096
  3,345
  3,604
  3,876
  4,161
  4,460
  4,773
  5,101
  5,446
  5,808
  6,188
  6,587
  7,007
  7,447
  7,910
  8,397
  8,909
  9,447
  10,013
  10,609
Tax expense, $m
  213
  276
  319
  365
  412
  462
  513
  567
  623
  682
  743
  836
  903
  973
  1,047
  1,124
  1,204
  1,289
  1,377
  1,470
  1,568
  1,671
  1,779
  1,892
  2,011
  2,136
  2,267
  2,405
  2,551
  2,704
  2,864
Net income, $m
  730
  746
  864
  986
  1,115
  1,248
  1,387
  1,533
  1,685
  1,843
  2,009
  2,260
  2,442
  2,631
  2,830
  3,038
  3,256
  3,484
  3,724
  3,976
  4,240
  4,517
  4,809
  5,115
  5,436
  5,775
  6,130
  6,504
  6,897
  7,310
  7,744

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,429
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,101
  6,042
  6,502
  6,980
  7,477
  7,993
  8,529
  9,087
  9,668
  10,272
  10,901
  11,556
  12,239
  12,951
  13,694
  14,470
  15,279
  16,126
  17,010
  17,934
  18,901
  19,913
  20,972
  22,080
  23,241
  24,457
  25,731
  27,065
  28,464
  29,931
  31,468
Adjusted assets (=assets-cash), $m
  4,672
  6,042
  6,502
  6,980
  7,477
  7,993
  8,529
  9,087
  9,668
  10,272
  10,901
  11,556
  12,239
  12,951
  13,694
  14,470
  15,279
  16,126
  17,010
  17,934
  18,901
  19,913
  20,972
  22,080
  23,241
  24,457
  25,731
  27,065
  28,464
  29,931
  31,468
Revenue / Adjusted assets
  1.259
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
Average production assets, $m
  835
  901
  969
  1,041
  1,115
  1,192
  1,272
  1,355
  1,441
  1,531
  1,625
  1,723
  1,825
  1,931
  2,042
  2,157
  2,278
  2,404
  2,536
  2,674
  2,818
  2,969
  3,127
  3,292
  3,465
  3,647
  3,836
  4,035
  4,244
  4,463
  4,692
Working capital, $m
  2,209
  247
  266
  286
  306
  327
  349
  372
  396
  421
  446
  473
  501
  530
  561
  593
  626
  660
  697
  734
  774
  815
  859
  904
  952
  1,002
  1,054
  1,108
  1,166
  1,226
  1,289
Total debt, $m
  1,965
  1,881
  2,264
  2,661
  3,075
  3,504
  3,950
  4,415
  4,897
  5,400
  5,923
  6,468
  7,037
  7,629
  8,247
  8,893
  9,566
  10,270
  11,006
  11,775
  12,580
  13,422
  14,303
  15,225
  16,191
  17,202
  18,262
  19,372
  20,536
  21,756
  23,035
Total liabilities, $m
  5,111
  5,027
  5,410
  5,807
  6,221
  6,650
  7,096
  7,561
  8,043
  8,546
  9,069
  9,614
  10,183
  10,775
  11,393
  12,039
  12,712
  13,416
  14,152
  14,921
  15,726
  16,568
  17,449
  18,371
  19,337
  20,348
  21,408
  22,518
  23,682
  24,902
  26,181
Total equity, $m
  1,990
  1,015
  1,092
  1,173
  1,256
  1,343
  1,433
  1,527
  1,624
  1,726
  1,831
  1,941
  2,056
  2,176
  2,301
  2,431
  2,567
  2,709
  2,858
  3,013
  3,175
  3,345
  3,523
  3,709
  3,905
  4,109
  4,323
  4,547
  4,782
  5,028
  5,287
Total liabilities and equity, $m
  7,101
  6,042
  6,502
  6,980
  7,477
  7,993
  8,529
  9,088
  9,667
  10,272
  10,900
  11,555
  12,239
  12,951
  13,694
  14,470
  15,279
  16,125
  17,010
  17,934
  18,901
  19,913
  20,972
  22,080
  23,242
  24,457
  25,731
  27,065
  28,464
  29,930
  31,468
Debt-to-equity ratio
  0.987
  1.850
  2.070
  2.270
  2.450
  2.610
  2.760
  2.890
  3.020
  3.130
  3.230
  3.330
  3.420
  3.510
  3.580
  3.660
  3.730
  3.790
  3.850
  3.910
  3.960
  4.010
  4.060
  4.100
  4.150
  4.190
  4.220
  4.260
  4.290
  4.330
  4.360
Adjusted equity ratio
  0.002
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168
  0.168

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  730
  746
  864
  986
  1,115
  1,248
  1,387
  1,533
  1,685
  1,843
  2,009
  2,260
  2,442
  2,631
  2,830
  3,038
  3,256
  3,484
  3,724
  3,976
  4,240
  4,517
  4,809
  5,115
  5,436
  5,775
  6,130
  6,504
  6,897
  7,310
  7,744
Depreciation, amort., depletion, $m
  172
  189
  196
  202
  209
  216
  223
  231
  238
  247
  255
  157
  166
  176
  186
  196
  207
  219
  231
  243
  256
  270
  284
  299
  315
  332
  349
  367
  386
  406
  427
Funds from operations, $m
  911
  935
  1,059
  1,189
  1,323
  1,464
  1,610
  1,763
  1,923
  2,090
  2,264
  2,417
  2,607
  2,807
  3,015
  3,234
  3,463
  3,703
  3,955
  4,219
  4,496
  4,787
  5,093
  5,414
  5,751
  6,106
  6,479
  6,870
  7,282
  7,716
  8,171
Change in working capital, $m
  -36
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
  48
  50
  52
  55
  57
  60
  63
Cash from operations, $m
  947
  917
  1,040
  1,169
  1,303
  1,443
  1,589
  1,741
  1,899
  2,065
  2,238
  2,390
  2,579
  2,777
  2,985
  3,202
  3,430
  3,668
  3,918
  4,181
  4,456
  4,746
  5,050
  5,369
  5,704
  6,056
  6,427
  6,816
  7,225
  7,655
  8,108
Maintenance CAPEX, $m
  0
  -76
  -82
  -88
  -95
  -101
  -108
  -116
  -123
  -131
  -139
  -148
  -157
  -166
  -176
  -186
  -196
  -207
  -219
  -231
  -243
  -256
  -270
  -284
  -299
  -315
  -332
  -349
  -367
  -386
  -406
New CAPEX, $m
  -117
  -66
  -69
  -71
  -74
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -102
  -106
  -111
  -116
  -121
  -126
  -132
  -138
  -144
  -151
  -158
  -165
  -173
  -181
  -190
  -199
  -209
  -219
  -229
Cash from investing activities, $m
  -440
  -142
  -151
  -159
  -169
  -178
  -188
  -199
  -210
  -221
  -233
  -246
  -259
  -272
  -287
  -302
  -317
  -333
  -351
  -369
  -387
  -407
  -428
  -449
  -472
  -496
  -522
  -548
  -576
  -605
  -635
Free cash flow, $m
  507
  775
  890
  1,010
  1,134
  1,264
  1,400
  1,542
  1,690
  1,844
  2,005
  2,145
  2,321
  2,505
  2,699
  2,901
  3,113
  3,335
  3,568
  3,813
  4,069
  4,339
  4,622
  4,919
  5,232
  5,560
  5,905
  6,268
  6,650
  7,051
  7,473
Issuance/(repayment) of debt, $m
  449
  365
  383
  398
  413
  429
  446
  464
  483
  503
  523
  545
  568
  593
  618
  645
  674
  704
  736
  769
  805
  842
  881
  922
  966
  1,012
  1,060
  1,111
  1,164
  1,220
  1,279
Issuance/(repurchase) of shares, $m
  -471
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -20
  365
  383
  398
  413
  429
  446
  464
  483
  503
  523
  545
  568
  593
  618
  645
  674
  704
  736
  769
  805
  842
  881
  922
  966
  1,012
  1,060
  1,111
  1,164
  1,220
  1,279
Total cash flow (excl. dividends), $m
  477
  1,140
  1,272
  1,407
  1,547
  1,694
  1,847
  2,006
  2,172
  2,346
  2,528
  2,690
  2,889
  3,098
  3,317
  3,546
  3,787
  4,039
  4,304
  4,582
  4,874
  5,180
  5,503
  5,841
  6,197
  6,571
  6,965
  7,379
  7,814
  8,271
  8,752
Retained Cash Flow (-), $m
  267
  -75
  -77
  -80
  -83
  -87
  -90
  -94
  -98
  -101
  -106
  -110
  -115
  -120
  -125
  -130
  -136
  -142
  -149
  -155
  -162
  -170
  -178
  -186
  -195
  -204
  -214
  -224
  -235
  -246
  -258
Prev. year cash balance distribution, $m
 
  1,050
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,115
  1,195
  1,327
  1,464
  1,607
  1,756
  1,912
  2,075
  2,245
  2,423
  2,580
  2,774
  2,978
  3,192
  3,416
  3,650
  3,897
  4,155
  4,426
  4,711
  5,010
  5,325
  5,655
  6,002
  6,367
  6,751
  7,154
  7,579
  8,025
  8,494
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,028
  1,094
  1,155
  1,205
  1,246
  1,275
  1,292
  1,297
  1,290
  1,270
  1,225
  1,184
  1,132
  1,072
  1,003
  928
  848
  765
  682
  599
  518
  442
  371
  306
  248
  197
  154
  117
  88
  64
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Rockwell Automation Inc. provides industrial automation and information solutions worldwide. It operates in two segments, Architecture & Software; and Control Products & Solutions. The Architecture & Software segment provides control platforms, including controllers, electronic operator interface devices, electronic input/output devices, communication and networking products, and industrial computers that perform multiple control disciplines and monitoring of applications, such as discrete, batch and continuous process, drives control, motion control, and machine safety control. This segment also offers software products that include configuration and visualization software, which is used to operate and supervise control platforms, process control software, and manufacturing execution systems and information solution software to enhance manufacturing productivity and meet regulatory requirements; and other products comprising sensors, machine safety components, and linear motion control products. The Control Products & Solutions segment offers low and medium voltage electro-mechanical and electronic motor starters, motor and circuit protection devices, AC/DC variable frequency drives, push buttons, signaling devices, termination and protection devices, relays, and timers; and various packaged solutions, such as configured drives and motor control centers to automation and information solutions. This segment also offers total life-cycle support services, including technical support and repair, asset management, training, maintenance, and safety and network consulting services. The company serves food and beverage, home and personal care, life sciences, automotive and tire, oil and gas, and mining and metal industries through independent distributors and direct sales force in the United States, Canada, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Rockwell Automation Inc. was founded in 1903 and is headquartered in Milwaukee, Wisconsin.

FINANCIAL RATIOS  of  Rockwell Automation (ROK)

Valuation Ratios
P/E Ratio 28.9
Price to Sales 3.6
Price to Book 10.6
Price to Tangible Book
Price to Cash Flow 22.3
Price to Free Cash Flow 25.4
Growth Rates
Sales Growth Rate -6.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.9%
Cap. Spend. - 3 Yr. Gr. Rate -4.3%
Financial Strength
Quick Ratio 5
Current Ratio 0.1
LT Debt to Equity 76.2%
Total Debt to Equity 98.7%
Interest Coverage 0
Management Effectiveness
Return On Assets 10.8%
Ret/ On Assets - 3 Yr. Avg. 12.5%
Return On Total Capital 18.9%
Ret/ On T. Cap. - 3 Yr. Avg. 20.8%
Return On Equity 34.4%
Return On Equity - 3 Yr. Avg. 33.2%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 42.1%
Gross Margin - 3 Yr. Avg. 42.2%
EBITDA Margin 19%
EBITDA Margin - 3 Yr. Avg. 19.6%
Operating Margin 16.1%
Oper. Margin - 3 Yr. Avg. 17%
Pre-Tax Margin 16%
Pre-Tax Margin - 3 Yr. Avg. 17%
Net Profit Margin 12.4%
Net Profit Margin - 3 Yr. Avg. 12.7%
Effective Tax Rate 22.6%
Eff/ Tax Rate - 3 Yr. Avg. 25.4%
Payout Ratio 51.8%

ROK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ROK stock intrinsic value calculation we used $5880 million for the last fiscal year's total revenue generated by Rockwell Automation. The default revenue input number comes from 2016 income statement of Rockwell Automation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ROK stock valuation model: a) initial revenue growth rate of 7.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for ROK is calculated based on our internal credit rating of Rockwell Automation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Rockwell Automation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ROK stock the variable cost ratio is equal to 57.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1609 million in the base year in the intrinsic value calculation for ROK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Rockwell Automation.

Corporate tax rate of 27% is the nominal tax rate for Rockwell Automation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ROK stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ROK are equal to 14.2%.

Life of production assets of 11 years is the average useful life of capital assets used in Rockwell Automation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ROK is equal to 3.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1990 million for Rockwell Automation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 128.441 million for Rockwell Automation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Rockwell Automation at the current share price and the inputted number of shares is $21.1 billion.

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COMPANY NEWS

▶ Webinar Replay: Investing in Robotics & AI   [Aug-08-17 09:59AM  Harvest Exchange]
▶ Rockwell Automation tops Street 3Q forecasts   [Jul-26-17 09:27PM  Associated Press]
▶ Rockwell elects Patricia Watson to board of directors   [Jun-14-17 11:40AM  American City Business Journals]
▶ Rockwell, ManpowerGroup partner for new program to train 1,000 veterans   [Jun-13-17 02:40PM  American City Business Journals]
▶ Mario Gabelli Comments on Rockwell Automation   [May-10-17 01:22PM  GuruFocus.com]
▶ These IQ 100 stocks are hitting lifetime highs   [Apr-26-17 01:58PM  CNBC Videos]
▶ Rockwell Automation beats Street 2Q forecasts   [07:12AM  Associated Press]
▶ 5 Key Takeaways From Emerson Electric Co. Presentations   [Apr-12-17 01:25PM  Motley Fool]
▶ 5 ways to invest in the robot revolution   [08:42AM  MarketWatch]
▶ [$$] Swiss group ABB returns to acquisition trail   [Apr-04-17 07:36AM  Financial Times]
▶ Rockwell Automation to Present at J.P. Morgan Conference   [Mar-09-17 03:26PM  Business Wire]
▶ [$$] Rise of the Robots   [Mar-04-17 12:01AM  at Barrons.com]
▶ Rockwell Automation to Present at Barclays Conference   [Feb-16-17 11:22AM  Business Wire]
▶ Emerson Electric Sees Growth Ahead   [Feb-08-17 02:03PM  at Motley Fool]
▶ Emerson Electric: I Told You So?   [Feb-07-17 11:48AM  at Barrons.com]
Stock chart of ROK Financial statements of ROK
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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