The automation industry is transforming businesses’ operations, creating smarter, more efficient systems across multiple sectors like manufacturing, healthcare, and logistics. In an era where cost reduction and streamlined workflows are paramount, industries are increasingly adopting automated solutions to stay competitive and meet growing demands.

As the automation landscape continues to evolve, some companies like RTX Corporation (RTX), Medtronic plc (MDT), and Parker-Hannifin Corporation (PH) are leading the charge and are well-positioned to capitalize on the industry’s tailwinds.

By now, we know that the potential for growth in AI and automation is enormous. McKinsey estimates that AI technologies could inject up to $13 trillion into the global economy by 2030. Whether it’s self-driving cars, robotic arms revolutionizing manufacturing, or AI algorithms enabling better decision-making in finance and healthcare, the applications of automation seem boundless. The automation market is forecast to reach $238.01 billion by 2030, growing at a CAGR of 7.2%.

Moreover, the machine tools market, valued at $97.93 billion in 2024, is projected to grow at a CAGR of 7% through 2030. This growth is driven by innovations like multi-axis robotics and smarter manufacturing techniques that prioritize precision and minimize downtime. As industries continue to embrace these technologies, automation is becoming an indispensable part of the global economy.

Let’s dig deeper into the fundamental aspects of the aforementioned stocks in detail:

RTX Corporation (RTX)

RTX is a global provider of systems and services for commercial, armed forces, and governmental clients in the aerospace and defense industries. It operates through three segments: Collins Aerospace; Pratt & Whitney; and Raytheon.

On January 16, RTX secured a $529 million contract to supply the Netherlands with a Patriot air and missile defense system fire unit, replacing one previously donated to Ukraine. This was followed by a $333 million contract awarded on January 13 by the U.S. Navy for producing Standard Missile-6 (SM-6) Block IA missiles.

These contracts underscore RTX’s expertise in missile defense systems and its critical role in strengthening national and allied defense capabilities while substantially boosting its revenue streams.

On December 12, 2024, the company paid its shareholders a quarterly dividend of $0.63 per share. RTX pays an annual dividend of $2.52, which translates to a dividend yield of 2.08% at the prevailing price levels. Its four-year average dividend yield is 2.34%. Moreover, its dividend payouts have increased at a CAGR of 7.3% over the past three years.

RTX’s trailing 12-month EBITDA margin of 15.90% is 13.8% higher than the industry average of 13.98%. Likewise, its trailing 12-month levered FCF margin of 10.21% is 48.5% higher than the industry average of 6.88%.

During the fiscal third quarter that ended September 30, 2024, RTX’s sales increased 49.2% year-over-year to $20.09 billion. Its adjusted operating profit grew 11.3% from the year-ago value to $2.48 billion. Its adjusted net income attributable to common shareowners amounted to $1.47 billion, reflecting an increase of 6.9% from the prior-year quarter. In addition, the company’s adjusted EPS came in at $ 1.45, up 16% year-over-year.

Analysts expect RTX’s EPS and revenue for the fourth quarter ended December 31, 2024, to increase 6.6% and 3.1% year-over-year to $1.38 and $ 20.54 billion, respectively. Moreover, it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is promising.

Over the past year, the stock has gained 42.4% to close the last trading session at $121.11. Also, it has gained 15.4% over the past six months.

RTX’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

RTX has an A grade for Momentum and a B for Growth. It is ranked #9 out of 70 stocks in the Air/Defense Services industry.

Beyond what we have stated above, we have also given RTX grades for Value, Stability, Sentiment, and Quality. You can get all the RTX ratings here.

Medtronic plc (MDT)

Headquartered in Dublin, Ireland, MDT provides healthcare technology solutions. It develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. The company operates through four segments: Cardiovascular Portfolio; Neuroscience Portfolio; Medical Surgical Portfolio; and Diabetes Operating Unit.

On January 13, 2025, MDT announced that the Centers for Medicare & Medicaid Services (CMS) had initiated a national coverage analysis for renal denervation, aiming to develop Medicare coverage policy for hypertension treatments. This move supports MDT’s Symplicity Spyral RDN system, potentially increasing patient access and strengthening the company’s position in the healthcare technology market.

In the same month, buoyed by its strong financial performance, the company paid a dividend of $0.70 per share for the third quarter of fiscal year 2025. It pays an annual dividend of $2.80, which translates to a dividend yield of 3.21% at the prevailing price levels. Its four-year average dividend yield is 2.85%. Moreover, its dividend payouts have increased at a CAGR of 4.1% over the past three years.

The stock’s trailing 12-month gross profit margin of 65.40% is 12% higher than the industry average of 58.37%. Likewise, its trailing-12-month EBIT and levered FCF margins of 19.77% and 15.19% are considerably above their respective industry averages of 2.68% and 2.33%.

MDT’s revenue increased 5.2% year-over-year to $8.40 billion in the fiscal 2025 second quarter that ended on October 25, 2024. Its non-GAAP operating profit came in at $ 2.04 million, up 1.6% year-over-year. In addition, the company’s non-GAAP net income reached $ 1.62 billion or $ 1.26 per share, indicating a marginal increase from the prior year quarter.

The consensus revenue estimate of $8.33 billion for the third quarter (ending January 2025) represents a 2.9% improvement year over year. The consensus EPS estimate of $1.36 for the same period indicates a 4.6% increase from the previous year. The company has an impressive surprise history, surpassing the consensus revenue and EPS estimates in each of the trailing four quarters.

The stock has surged 8.4% over the past six months and 10.3% year-to-date to close the last trading session at $88.08.

MDT’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.

It has a B grade for Value and Stability. Of the 133 stocks in the Medical – Devices & Equipment, it is ranked #23. To access MDT’s Growth, Momentum, Sentiment, and Quality ratings, click here.

Parker-Hannifin Corporation (PH)

PH specializes in motion and control technologies, serving industrial, mobile, and aerospace markets through its Diversified Industrial and Aerospace Systems segments. It offers a wide range of products, including motion-control systems, sealing solutions, filtration, and aerospace components, distributed via OEMs and sales networks worldwide.

On November 4, 2024, PH announced the completion of its divestiture of the North America Composites and Fuel Containment (CFC) Division to SK Capital Partners. This move aligns with the company’s strategic focus on core business areas in motion and control technologies.

The stock’s trailing-12-month net income margin of 14.47% is 122.6% higher than the industry average of 6.50%. Likewise, its trailing-12-month EBIT and levered FCF margins of 20.25% and 12.38% are 95.9% and 80% above their respective industry average of 10.33% and 6.88%.

PH’s net sales increased 1.2% year-over-year to $4.90 billion in the fiscal 2025 first quarter that ended on September 30, 2024. Its income before income taxes grew 6.7% from the year-ago value to $ 875.19 million. The company’s adjusted net income attributable to common shareholders came in at $809.79 million, up 4.3% year-over-year, while adjusted EPS rose 4% from the prior year’s quarter to $6.20.

Street expects PH’s EPS for the fiscal second quarter (ended December 31, 2024) to increase 1.3% year-over-year to $6.23, while its revenue for the same period is expected to be $4.80 billion. In addition, it surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.

Shares of PH have gained 46.8% over the past year and 20% over the past six months to close the last trading session at $669.46.

PH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has a B grade for Momentum, Stability, and Quality. Within the Industrial – Equipment industry, it is ranked #24 out of 89 stocks. Click here to see PH’s ratings for Growth, Value, and Sentiment.

What To Do Next?

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RTX shares closed at $121.11 on Friday, up $0.65 (+0.54%). Year-to-date, RTX has gained 4.66%, versus a 1.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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