Rockwell Automation Inc (NYSE:ROK) saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $206.56 and falling to the lows of $168.96. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Rockwell Automation’s current trading price of $172.88 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Rockwell Automation’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Rockwell Automation
Is Rockwell Automation still cheap?According to my valuation model, the stock is currently overvalued by about 76%, trading at US$172.88 compared to my intrinsic value of $98.19. This means that the opportunity to buy Rockwell Automation at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Rockwell Automation’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Rockwell Automation?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Rockwell Automation’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? ROK’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ROK should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on ROK for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ROK, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Rockwell Automation. You can find everything you need to know about Rockwell Automation in the latest infographic research report. If you are no longer interested in Rockwell Automation, you can use our free platform to see my list of over 50 other stocks with a high growth potential.