Rockwell vs. Cognex: Which Automation Stock is a Better Buy?

NYSE: ROK | Rockwell Automation, Inc.  News, Ratings, and Charts

ROK – Rockwell Automation (ROK) and Cognex (CGNX) are two of the top automation stocks that investors should consider adding to their portfolios. Automation will mark the next phase of industrial development and lead to lower prices and more innovation.

Automation stocks will be squarely in the spotlight in the years ahead. These companies will be one of the major beneficiaries of increased industrial activity and productivity.
 
Automation will lead to significantly lower production costs. They also enable facilities to be run at full capacity on a constant basis. Although it does lead to disruptive impacts on employment in the short term, the productivity gains will boost long-term prospects.
 
For investors, this is an opportunity. Rockwell Automation (ROK) and Cognex (CGNX) are two of the top automation stocks to consider adding to your portfolio.
 
Rockwell Automation (ROK)

ROK specializes in industrial automation along with information solutions. ROK’s network stretches across 100 nations. However, half of the company’s aggregate sales are right here in the USA.

ROK has a B POWR Rating grade. The stock has an A Quality component grade along with a B Stability component grade. ROK has Cs in the Momentum and Sentiment components. Investors who would like to learn more about ROK’s performance in additional POWR Rating components such as Value and Growth can find out that information by clicking here.

Out of the 86 stocks in the Industrial – Machinery space, ROK is ranked 40th. This industry as a whole has an A POWR Rating grade. Click here to learn more about the stocks in this space.

The analysts are slightly bullish on ROK, setting an average target price of $274.90 for the stock. If ROK hits this target price, it will have popped by about 5%. The high target price for the stock is $313 while the low is $205. A total of 22 analysts have issued ROK recommendations. Exactly six of the analysts view ROK as a Strong Buy, three view it as a Buy, 11 view it as a Hold, one considers it a Sell, and one more considers it a Strong Sell.

ROK has a forward P/E ratio of 28.41. This is a reasonable figure considering ROK is trading merely $12 below its 52-week high of $275.43. Furthermore, ROK is also attractive as it has a low beta of 1.36, indicating the stock will not give up much of its gains should the market sour.

ROK’s executives have stated its organic sales for this year will grow between 4.5% and 7.5%. This is a solid sales growth forecast as prior guidance was a full percentage point less on both the low and high ends. However, ROK leaders also reduced guidance for process automation sales figures across the year ahead due to a decline in sales to clients in the gas and oil industries.

Cognex (CGNX)

CGNX designs develop and make computers with visual capabilities. As the globe’s top machine vision industry player, CGNX has shipped more than 200,000 systems for computer vision. This sales total amounts to $1.5 billion in aggregate revenue.

CGNX has a C POWR Rating grade, indicating the stock is a Hold. However, CGNX has some superb POWR Rating components, namely its Quality, Sentiment, and Growth components which grade out as Bs. Investors who would like to learn more about how CGNX fares in the rest of the POWR Ratings components such as Value, Momentum, and Stability can do that by clicking here.

Of the 86 publicly traded companies in the Industrial – Machinery segment, CGNX is ranked 58th. Click here to learn more about the stocks in this industry.

CGNX has a forward P/E ratio of 50.75, a fairly high figure even considering the stock’s tech-related industry. However, CGNX won’t prove excessively volatile as its beta is only 1.64.

Let’s take a look at what the analysts have to say about CGNX. The stock has an average target price of $90.79, representing a 16% upside. The highest target price for the stock is $120 while the lowest target price is $63. Of the 16 analysts who have issued CGNX recommendations, two consider the stock a Strong Buy, three consider it a Buy, nine consider it a Hold, one considers it a Sell, and one view it as a Strong Sell.

Which is the Better Play?

ROK is the better of these two automation stocks. ROK has a better POWR Ratings performance. ROK is ranked 18 slots higher than CGNX in the industry rankings. If you are on the prowl for an automation stock, ROK is undoubtedly one of the better plays.


ROK shares were trading at $262.38 per share on Friday morning, down $0.71 (-0.27%). Year-to-date, ROK has gained 5.49%, versus a 12.83% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


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