Recruiter’s View

Investors loved Rockwell Automation’s higher earnings guidance today, rushing stocks higher on strong volume.  Our question:  Will sales growth in Asia mean jobs growth in the U.S.?

Rockwell Automation (ROK) reported that fiscal Q1 revenues “exceeded our expectations,” with improved prospects ahead.

From a distance, the new financials only seem to suggest that the pain has stabilized slightly. 

All the key numbers are soft: Revenues, profits, everything. What kept the financials under control is continued cost cutting and “strong growth in emerging Asia.”

This well-run company remains positive, turning a profit every quarter – even in this environment – and it continues to show a good balance sheet.

Rockwell is one of the benchmark companies we are watching as we look for recovery in the automation industry. The logic is: If there’s an increase in the sales of automation controls, then automation projects must also be on the upswing.

A $300 Million Surprise – In the case of Rockwell, CEO Keith Nobusch pointed to an “improved global economy” and an “improved revenue baseline” to conclude that he should guide higher for 2010.  He now projects revenues at $4.4 billion to $4.6 billion with per share earnings coming in around $2.00 to $2.40.

That’s a significant increase over the guidance he gave in November and December, suggesting then that per share earnings might dwell down around $1.25 – $1.75 on estimated sales grinding it out some $300 million lower.

Something big is happening.  In an equities market seriously damaged by recent political posturing in Washington, this was a powerful piece of good news.  ROK traded below $46 per share just yesterday.

With today’s announcement, Rockwell stock gapped higher, eventually running well over $51 on big volume.

Recruiter’s View –  If we can get similar improvement from our other benchmark companies, then we may have confirmation that we’ve turned the corner, at least globally.

Increased sales will eventually translate to more jobs.

Then, our question will be:  Do increased sales in Asia create more jobs in the U.S.?

We’ll keep an eye on it.