EUR 850.00 For Business Accounts Only

Morningstar | Rockwell's Near-Term Headwinds Don't Alter Our Long-Term Thesis

We view Rockwell Automation as a high-quality, pure-play automation firm that’s long been dominant in discrete manufacturing. Today, it’s one of a handful of competitors seeking to: 1) gain a stronger foothold in hybrid manufacturing; and 2) bring its vision of The Connected Enterprise, which marries traditional operating plant assets with software data analytics, to life. Rockwell’s signature platform in this strategy is Logix, which consists of programmable controllers and a line of products that are interoperable with third-party and some legacy applications. The advantage of this platform is multifold. First, Logix can perform multiple automation applications, like discrete (for example, automotive), process (e.g. chemicals), and hybrid (e.g. pharmaceuticals) on a single platform. Most competitors pursue these automation applications through a piecemeal mix of hardware and firmware platforms. Second, by using a single, easy-to-use platform, Logix reduces training costs and maintenance expenses as well as makes it easier to communicate across different manufacturing cells. We believe training costs will become a greater consideration as technology inevitably becomes increasingly integrated into manufacturing facilities. Ultimately, workers will need to be comfortable with that technology that can become complicated if they’re forced to learn multiple platforms. Third, because Logix works with third-party applications, customers can make incremental improvements to their facilities without having to incur the disruption and expense of a complete system overhaul. We believe this should allow for cheaper installation and scale-up costs. Finally, like other automation counterparts, the Logix platform offers customers the opportunity to run analytics on the cloud, allowing for improved asset utilization as well as lower total cost of ownership. Predictive maintenance further allows for reduced enterprise risk, while analytics helps customer products get to market faster through optimized throughput. Ultimately, we believe the value offered by its solutions (and its PTC partnership) should allow the firm to remain a top player in the growing automation industry.