Automation has become essential in today’s economy, driving productivity, efficiency, and quality while helping businesses navigate economic challenges. AI-driven solutions like autonomous robots and machine learning are streamlining processes, reducing costs, boosting quality, and reshaping manufacturing.
To capitalize on this trend, investors might consider top automation stocks like Intuitive Surgical, Inc. (ISRG), Honeywell International Inc. (HON), and Rockwell Automation, Inc. (ROK), which are leading the future of manufacturing.
Automation is transforming healthcare, aerospace, and manufacturing with advancements in building systems, sustainable energy, and digital solutions. By addressing labor shortages and enabling employees to focus on higher-skilled roles, automation reduces reliance on a shrinking workforce, making it a promising investment opportunity now and for the future.
The global automation-as-a-service market, valued at $2.04 billion in 2024, is projected to reach $13.45 billion by 2034, growing at a 20.75% CAGR. This growth highlights innovations in healthcare for enhanced patient experiences, cost reductions, and accurate diagnoses, as well as advancements in industrial robotics to boost efficiency, reduce labor demands, and improve worker safety.
Furthermore, with the Industry 4.0 automation revolution, manufacturing is poised for gains in efficiency, productivity, faster time-to-market, cost savings, improved decision-making, and optimized supply chains. Reflecting this potential, the industrial machinery market is expected to grow at a 7.5% CAGR from 2024 to 2032.
Considering these trends, let’s assess the fundamentals of the abovementioned automation stocks.
Intuitive Surgical, Inc. (ISRG)
ISRG develops, manufactures, and markets products that enable physicians and healthcare providers to enhance the quality of and access to minimally invasive care internationally. The company offers the da Vinci Surgical System and the Ion endoluminal system.
In terms of the trailing-12-month levered FCF margin, ISRG’s 8.10% is 277.3% higher than the 2.15% industry average. Likewise, its 15.69% trailing-12-month Capex / Sales is 386.5% higher than the 3.23% industry average. Moreover, its 26.24% trailing-12-month EBIT margin is significantly higher than the 2.29% industry average.
ISRG’s total revenues for the third quarter ended September 30, 2024, increased by 17% year-over-year to $2.04 billion. Its non-GAAP net income attributable to ISRG was $669.10 million, or $1.84 per share, up 27.7% and 26% from the prior-year quarter, respectively. Additionally, the company’s non-GAAP income from operations increased slightly year-over-year to $754.90 million.
Street expects ISRG’s EPS and revenue for the quarter ending December 31, 2024, to increase 9.5% and 14.1% year-over-year to $1.75 and $2.20 billion, respectively. It surpassed the Street EPS estimates in each of the trailing four quarters. The stock has gained 88.1% over the past year to close the last trading session at $524.28.
ISRG’s POWR Ratings reflect strong fundamentals. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #79 out of 138 stocks in the Medical - Devices & Equipment industry. It has an A grade for Sentiment. To see ISRG’s Growth, Value, Momentum, Stability, and Quality ratings, click here.
Honeywell International Inc. (HON)
HON engages in aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses internationally. It operates in the Aerospace segment, Honeywell Building Technologies segment, Performance Materials and Technologies segment, and Safety and Productivity Solutions segment.
In terms of the trailing-12-month EBIT margin, HON’s 20.89% is 104.3% higher than the 10.23% industry average. Similarly, its 7.73% trailing-12-month Return on Total Assets is 46.9% higher than the 5.26% industry average. Moreover, its 10.07% trailing-12-month levered FCF margin is 54.5% higher than the 6.52% industry average.
In the third quarter ended September 30, 2024, HON’s net sales increased 8.5% year-over-year to $9.73 billion. Likewise, its segment profit grew 5.8% from the year-ago value to $2.30 billion. HON’s adjusted EPS was $2.58, an increase of 8.4% from the prior-year period. Additionally, the company’s free cash flow amounted to $1.72 billion, up 10.1% year-over-year.
For the quarter ending December 31, 2024, HON’s EPS and revenue are expected to increase 7% and 8.5% year-over-year to $2.78 and $10.24 billion, respectively. HON surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 16.6% to close the last trading session at $217.50.
HON’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
HON has a B grade for Momentum and Stability. It is ranked #24 out of 79 stocks in the A-rated Industrial - Machinery industry. Click here to access additional ratings of HON for Growth, Value, Sentiment, and Quality.
Rockwell Automation, Inc. (ROK)
ROK provides industrial automation and digital transformation solutions across North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. The company operates through three segments: Intelligent Devices, Software & Control, and Lifecycle Services. Its solutions include hardware, software products, and services.
On October 29, 2024, ROK announced the FactoryTalk DataMosaix App Builder, a low/no-code tool for creating industrial data visualizations and dashboards, integrated with FactoryTalk DataMosaix for seamless data management across cloud and on-premise platforms. This solution simplifies data access and reporting for enhanced productivity.
On October 15, 2024, ROK announced advancements to its FactoryTalk Optix portfolio with DataReady smart machines, enhancing real-time insights, seamless data transfer, and edge-to-cloud analytics for improved operational efficiency. This update empowers users with advanced visualization, HMI, and data exchange capabilities across various industrial applications.
In terms of the trailing-12-month gross profit margin, ROK’s 39.83% is 25.5% higher than the 31.73% industry average. Its 20.40% trailing-12-month EBITDA margin is 46.4% higher than the 13.94% industry average. Likewise, the stock’s 17.07% trailing-12-month EBIT margin is 66.9% higher than the 10.23% industry average.
ROK’s total sales for the third quarter ended September 30, 2024, were $2.04 billion. The company’s gross profit stood at $770.60 million. In addition, its adjusted net income and adjusted EPS were $281.90 million and $2.47, respectively.
Analysts expect ROK’s EPS and revenue for the quarter ending June 30, 2025, to increase 2.9% and 4.7% year-over-year to $2.79 and $2.15 billion, respectively. It surpassed the Street EPS estimates in three of the trailing four quarters. Over the past three months, ROK’s stock has gained 11.2% to close the last trading session at $277.09.
ROK’s POWR Ratings reflect robust prospects. It is ranked #58 in the Industrial – Machinery industry. It has a B grade for Momentum and Quality. Click here to see ROK’s Growth, Value, Stability, and Sentiment ratings.
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ISRG shares were unchanged in after-hours trading Friday. Year-to-date, ISRG has gained 59.01%, versus a 27.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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