Rockwell Automation (NYSE: ROK) rocked the Street with a huge 47% jump in its third quarter earnings, driven by strong sales across all geographic regions. The numbers, however, did not impress investors much, as the stock retreated nearly 5%. Was it just an overflow of general shaky economic sentiment, or is there something more to Rockwell's numbers?
The numbers
Rockwell's Architecture and Software segment saw 21% revenue growth from the year-ago quarter, to $672.9 million. Though 6% of that jump can be attributed to currency translations, the primary driving factor was a 25% growth in its information-enabled Logix platform. The other larger segment, Control Products and Solutions, also saw sales rise by 18% over last year. Overall, organic revenues grew a healthy 13% in the quarter.
Rockwell's numbers are keeping up with the recent trend of good performances in the automation sector. Emerson Electric's (NYSE: EMR) industrial automation segment's sales grew 24% in the third quarter, while Honeywell International's (NYSE: HON) Automation and Control Solutions segment's sales surged 20% in its second quarter.
Every geographic region Rockwell has a presence in experienced strong sales growth in the just-concluded quarter. This top-line growth helped its net income surge to $179.5 million from $119.4 million in the year-ago quarter.
Rockwell continues to return value to shareholders. It has raised its quarterly dividend by 21% to $0.425 per share. It also repurchased shares worth $114.3 million.
Emerging trend
Apart from growing U.S. markets, automation players are gaining from robust demand in emerging markets. Rockwell's Latin America and Asia-Pacific sales grew 21% and 14%, respectively, in the latest quarter. India witnessed a 27% growth in organic sales.
Siemens' (NYSE: SI) revenues from emerging markets accounted for almost a third of its total revenues in the third quarter, with India growing at 34%. ABB (NYSE: ABB) also saw the highest order growth in Asia, up more than 50%, in its second quarter.
Rockwell is wisely looking at tapping this growing emerging-market trend further. The Wisconsin-based company is now aiming at 60% revenues from outside the United States, up from 20% in fiscal 2010. It also expects to improve Asia-Pacific sales by 20% this year.
Rockwell recently acquired an automation service provider with a view to expand in Europe and Asia. Before that, it targeted the Southern Africa region by acquiring a company based there.
The Foolish bottom line
Rockwell has raised its fiscal 2011 revenues and earnings guidance. Keeping the company's good performance in mind, it looks like a stock worth considering.
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