Moody’s changes Rockwell view to stable

Moody's Investors Service said it affirmed Rockwell Automation, Inc.'s senior unsecured rating of A3 and short-term rating of Prime-2 and revised the outlook to stable from positive.

The stable outlook reflects several considerations. Moody's expects weaker revenue growth given the company's exposure to capital expenditures in the cyclical resource sector, a key end-market. This in turn makes it less likely that Rockwell would quickly attain greater scale, a negative differentiator compared to its larger, more diversified competitors and rating peers.

Furthermore, debt levels have increased as higher dividends and share repurchases have required external funding at the parent while tax issues have impeded repatriation of funds generated and retained abroad. This has eroded and slowed some of the progress in its metrics.

Collectively these made it less likely that stronger ratings will develop over the coming year, Moody’s said. Still, the company has excellent liquidity with margins and cash flows viewed as sustainable.

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