Rockwell Automation Earnings Preview: Options Turn Bullish as Shorts Cover

Rockwell Automation reports fiscal fourth-quarter results on November 5 with positioning that has shifted noticeably more constructive over the past two weeks.

Options traders have moved to the bullish end of the spectrum into this print. The put/call ratio has dropped to 0.44, well below its 20-day average of 0.59 and roughly one standard deviation on the optimistic side. That contrasts sharply with readings above 0.70 that persisted through most of October and above 0.89 in late September, suggesting a meaningful rotation from hedging toward call buying as the date has approached.

Short sellers have been covering aggressively. Short interest fell 11.5% over the past week to 2.87% of the free float, a move 1.6 standard deviations below the stock's typical weekly change. The borrow market is equally relaxed: cost to borrow is 0.47%, near the low end of its recent range, and availability has widened to 3,573%, meaning the lending pool is far from any squeeze pressure. Together, options and short positioning tell the same story: investors are reducing risk hedges and unwinding bearish bets heading into the announcement.

The analyst debate centres on whether Rockwell's aggressive cost programme can offset persistent revenue pressure. The bull case rests on margin recovery: management raised full-year non-GAAP EPS guidance to $9.20 to $10.20, targeting around 20% segment margins and over $250 million in year-on-year cost savings. Morgan Stanley raised its Overweight target to $545 in early September, reflecting confidence in that trajectory. The bear case is harder to dismiss: revenue fell 4% year-over-year last quarter across all three segments, and forecasts point to roughly a 2% decline in fiscal 2025 with decremental margins near 28%. Mizuho trimmed its target to $430 in October, keeping a Neutral rating. Wells Fargo initiated at Equal-Weight with a $426 target in late September, sitting below the current price of $436. The mean analyst target of $475 implies modest upside, but a cluster of neutral ratings near the current price reflects Street skepticism about whether cost cuts can drive durable earnings growth without a revenue recovery.

The last earnings print, in August, offers a sobering reference point. The stock fell 6.4% on the day and extended that to a 7.1% loss over the following five sessions. The November 5 print will test whether the EPS guidance raise and margin narrative have enough momentum to overcome a market that has punished Rockwell before when results disappointed, even modestly.