I ran into a long-time acquaintance a couple of weeks ago (before the coronavirus impact) who told me he was all-in investing in Rockwell Automation. The stock had been slowly oscillating between the 170s and 210 for some time. He felt it was destined to keep growing beyond 210.

Note: before retirement, he owned a Rockwell distributorship.

That piqued my interest. When I saw the latest analyst briefing, I took a dive. The transformation of the business is almost startling.

Sales by region must be a bit disappointing as former CEO Keith Nosbusch made it a goal to reduce dependence upon North American markets. For the last year, NA sales are almost 60% of total, with EMEA at 19% and Asia only 14%. However, sales were edging close to $7 billion with a target to top $7 billion this FY. That is good growth.

Breaking out sales by type of industry, hybrid is 40%, process 35%, and discrete at 25%. I imagine if I were to ask 100 people in the industry, more than 90 would guess that Rockwell was still a predominantly discrete automation player.

Showing the general state of manufacturing, Rockwell is strongest in Food & Beverage (20% of sales) followed by Oil & Gas (10%) which is approximate equal in share to automotive. I don’t know if that means the large investment that Nosbusch made in process industry acquisitions is paying off, but it apparently is.

Like many colleagues, I was shocked at the huge valuation Rockwell Automation placed on PTC when it invested $1 billion. But when I saw everything ThingWorx (and the rest of the PTC IoT portfolio) could do–meaning the company could stop many development programs saving a ton of cash–Blake Moret’s (current CEO) move looked very smart.

I like to point out to my close Rockwell acquaintances that I had renamed my site “The Manufacturing Connection” before they announced the “Connected Enterprise” strategy, we both agree that “connections” are where the action is.

Since I’m not an investor in individual stocks, I’m not making any recommendations. But I’d have to say that my old acquaintance is looking pretty smart.

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