Rockwell’s software engine points to another year of growth

Software growth drives Rockwell’s next stage

Rockwell Automation, Inc. (NYSE:ROK) is entering fiscal 2027 with its strongest growth engine increasingly visible in the numbers: Software & Control sales rose 18% to US$2.818 billion for fiscal 2026, while segment operating margin widened to 33.8% from 29.7%. The Milwaukee-based industrial automation group forecast organic sales growth of 6% to 9% for the year ahead, alongside adjusted earnings per share of US$14.50 to US$15.50.

The full-year performance was broad, though not uniform. Group sales rose 8% to US$8.989 billion, with Intelligent Devices up 11% to US$4.185 billion and Software & Control up 18%. Lifecycle Services was the weak spot, with reported sales down 6% to US$2.071 billion and organic sales down 2%; divestitures accounted for a 6 percentage-point reduction in that segment’s reported growth.

Earnings benefited from operating gains and one-off comparisons

Rockwell reported fiscal 2026 diluted earnings per share of US$12.54, up 63% from US$7.67, while adjusted EPS rose 27% to US$13.42. The gap between the two measures matters: adjusted EPS excludes items including acquisition-related amortisation, restructuring charges, charitable contributions and Sensia-related effects. The company also changed its adjusted-measure definition in fiscal 2026 to exclude charitable contributions and the gain on dissolution of the Sensia joint venture.

Reported profit growth was helped by more than underlying trading momentum alone. The prior-year comparison included a US$224 million non-cash impairment charge tied to the Sensia joint venture, while fiscal 2026 included US$103 million of International Emergency Economic Powers Act tariff refunds and US$5 million of related interest. Rockwell accrued US$85 million for refunds to customers, leaving a net after-tax benefit of US$0.11 per share in both diluted and adjusted EPS. The company said the tariff-related items also added US$108 million to operating cash flow and free cash flow.

Cash generation supports buybacks and dividends

Cash provided by operating activities increased 27% to US$1.958 billion, while free cash flow rose 25% to US$1.701 billion. Free cash flow conversion was 113% of adjusted income, broadly comparable with 114% a year earlier. Rockwell returned capital through US$618 million of dividends and repurchased 3.1 million shares for US$1.254 billion during the year, with US$673 million still available under its repurchase authorisation at 30 September.

The fourth quarter showed the same pattern in sharper relief. Sales rose only 1% to US$2.332 billion, or 3% organically after the customer tariff refund programme reduced reported and organic growth by about four percentage points. Enterprise operating margin nevertheless expanded to 24.5% from 21.3%, and adjusted EPS rose 16% to US$3.88. Software & Control led the quarter with 15% sales growth, while Lifecycle Services reported a 9% decline as divestitures masked 2% organic growth.

Fiscal 2027 guidance leaves execution as the test

Rockwell’s fiscal 2027 guidance calls for reported sales growth of 4.5% to 7.5%, organic growth of 6% to 9%, diluted EPS of US$13.78 to US$14.78 and adjusted EPS of US$14.50 to US$15.50. The company said the reported and organic sales outlook includes an approximately one percentage-point benefit from the fiscal 2026 customer tariff refund programme, while divestitures are expected to reduce reported growth by about 1.5 percentage points.

Chief executive Blake Moret said the company sees “healthy customer demand and significant new product releases” as industrial operations become more AI-enabled and autonomous. That ambition now faces a clearer numerical hurdle: sustaining organic growth and margin expansion after tariff benefits roll off, while converting the strong performance in Software & Control and Intelligent Devices into enough momentum to offset the continuing drag from Lifecycle Services.