Critical Review: AMTEK (AME) vs. Rockwell Automation (NYSE:ROK)

AMTEK (NYSE: AME) and Rockwell Automation (NYSE:ROK) are both large-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, dividends, institutional ownership, risk, profitability, analyst recommendations and valuation.

Profitability

This table compares AMTEK and Rockwell Automation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AMTEK 13.26% 16.28% 7.68%
Rockwell Automation 13.04% 40.71% 12.03%

Earnings & Valuation

This table compares AMTEK and Rockwell Automation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AMTEK $3.99 billion 3.64 $1.04 billion $2.28 27.61
Rockwell Automation $6.18 billion 3.35 $1.22 billion $6.20 26.03

Rockwell Automation has higher revenue and earnings than AMTEK. Rockwell Automation is trading at a lower price-to-earnings ratio than AMTEK, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

89.5% of AMTEK shares are held by institutional investors. Comparatively, 73.4% of Rockwell Automation shares are held by institutional investors. 2.1% of AMTEK shares are held by insiders. Comparatively, 1.7% of Rockwell Automation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

AMTEK pays an annual dividend of $0.36 per share and has a dividend yield of 0.6%. Rockwell Automation pays an annual dividend of $3.04 per share and has a dividend yield of 1.9%. AMTEK pays out 15.8% of its earnings in the form of a dividend. Rockwell Automation pays out 49.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AMTEK has raised its dividend for 7 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for AMTEK and Rockwell Automation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AMTEK 0 1 9 0 2.90
Rockwell Automation 1 11 2 0 2.07

AMTEK currently has a consensus price target of $64.40, indicating a potential upside of 2.32%. Rockwell Automation has a consensus price target of $148.31, indicating a potential downside of 8.10%. Given AMTEK’s stronger consensus rating and higher possible upside, research analysts clearly believe AMTEK is more favorable than Rockwell Automation.

Volatility & Risk

AMTEK has a beta of 1.34, suggesting that its share price is 34% more volatile than the S&P 500. Comparatively, Rockwell Automation has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.

Summary

AMTEK beats Rockwell Automation on 11 of the 17 factors compared between the two stocks.

About AMTEK

AMETEK, Inc. is a manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The Company operates through two segments: Electronic Instruments (EIG) and Electromechanical (EMG). EIG designs and manufactures instruments for the process, power and industrial and aerospace markets. EIG provides process and analytical instruments for the oil, gas, petrochemical, pharmaceutical, semiconductor and automation markets. It makes monitoring and metering devices, industrial battery chargers and uninterruptible power supplies, programmable power equipment, electrical test equipment and gas turbine sensors. EMG is a differentiated supplier of precision motion control solutions, thermal management systems, specialty metals and electrical interconnects. Its end markets include medical, automation, petrochemical and other industrial markets. It operates a network of aviation maintenance, repair and overhaul (MRO) facilities.

About Rockwell Automation

Rockwell Automation, Inc. (Rockwell Automation) is a provider of industrial automation power, control and information solutions for manufacturers. The Company operates through two segments: Architecture & Software and Control Products & Solutions. The Architecture & Software segment contains various hardware, software and communication components of the Company’s integrated control and information architecture capable of controlling the customer’s industrial processes and connecting with their manufacturing enterprise. Architecture & Software has a portfolio of products, including Control platforms that perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control and machine safety control. The Control Products & Solutions segment portfolio includes low and medium voltage electro-mechanical and electronic motor starters, signaling devices, termination and protection devices, relays and timers.

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