Shares of robotics manufacturers ABB (NYSE:ABB) and Rockwell Automation (NYSE:ROK) both jumped Tuesday following so-so earnings reports during a trading session that was anything but decidedly bullish. Rockwell topped its sales and earnings estimates for the three-month stretch ending in March, but the bar was set low. Unlike ABB, Rockwell Automation managed to grow its top and bottom lines, yet each company cautioned investors that coronavirus-related shutdowns were already taking a financial toll on the quarter currently underway. The stocks rallied anyway.
That bullish interest may be rooted in an idea that's much bigger than last quarter or the present quarter, however.
While the sheer disruption caused by the coronavirus is making it difficult to "do" any sort of business, and the prospect of a recession is forcing some organizations to rethink spending plans, the COVID-19 contagion has exposed a weak link in the world's commerce engine -- people. If people can't or won't work, things don't get done. Robots, however, don't get sick.
Image source: Getty Images.
For its second fiscal quarter ending in March, U.S.-based Rockwell turned $1.68 billion worth of revenue into operating earnings of $2.43 per share. That was better than the $2.04 per share earned in the same quarter a year earlier when the company generated $1.66 billion worth of business. But, organic sales were flat, and Rockwell warned its shareholders that organic revenue looked as if it was going to slump between 6.5% and 9.5% this year.
Swiss automation company ABB fared worse in its first quarter of the year, with revenue of $6.21 billion sliding 9% lower compared to the year-earlier comparison of $6.85 billion. Operating earnings before interest, taxes, depreciation, and amortization (EBITDA) slipped 17% to $636 million, coinciding with a comparable decrease in profit margins.
The company didn't offer detailed full-year guidance, but CEO Bjorn Rosengren did comment, "In the second quarter, we expect ABB's operations to be significantly challenged by a sharp drop in demand due to lockdowns in many parts of the world."
So why the big advances for each? Most plausibly because investors know where the present global situation is leading.
GlobalData analyst Wafaa Hassan was the latest to chime in on the matter, commenting on Tuesday, "Robots have been replacing humans in certain jobs for some time, but the COVID-19 crisis is accelerating the process."
Hassan was responding to reports that robotics company Brain Corp. had secured new funding that will primarily go to expanding the use of its robots to scrub floors for companies that have been under shutdown orders for weeks now. Other floors have gotten use, like stores operated by in Walmart and Kroger, both of which already use Brain's cleaning robots. Walmart is buying another 1,500 robots in response to the COVID-19 contagion and the expanded need for cleanliness.
It was Hassan's broader assessment that points to the changing underpinnings of the industry's forward progress. He adds, "The COVID-19 crisis will ultimately increase the use of robotics across all industries."
He's not alone in his expectation. While almost all companies will have to fight to work past the temporary financial roadblock put in place by the coronavirus, manufacturing sites, processing plants, and other industrial companies don't want to be trapped in the same situation again. International Data Corporation's (IDC's) Jordan Speer wrote for IndustryWeek late last month that more than 70% of the companies participating in IDC's 2020 Supply Chain Survey said robotics will be important, or very important, to their organization within the next three years.Market research company Fact.MR now believes the robotic process automation market is poised to grow at a compound annual growth rate of 33% through 2029 due to the adverse impact of COVID-19.
Rockwell Automation and ABB certainly aren't the only automation names that stand to benefit from the displacement of millions of workers. Fellow Fool Lee Samaha named 10 robotics stocks last year that may catch a nice tailwind as we move into the new normal of a post-coronavirus world.
Rockwell and ABB may be the easiest to own, however, due to their bigger size and more straightforward product lines. ABB makes total control systems for materials companies, auto manufacturers, paper companies, and food processors --just to name a few -- all hit hard by shutdowns. Rockwell makes servos, computerized motion-control systems, and the sensors that make them all work together properly, plus more.
Of the two, Rockwell Automation appears to be the lower-stress pick right now. Not only is it seemingly faring better than ABB in what's turned into a very uncertain environment, but there's also better visibility. While Rockwell knows revenue is apt to dip this year, at least it's been willing to suggest how much that's going to happen. And, analysts still expect a resumption of solid growth after this year.
Data source: Thomson Reuters/Refinitiv. Chart by author/
More than anything though, these are both names well suited to capitalize on a bigger theme -- robotics -- than a short-term cultural or societal tide. As an example, a biopharma company that comes up with a treatment for the coronavirus may do very well for a quarter or two, but there's no thrilling follow-up. The aforementioned IDC, conversely, believed earlier this year that the global robotics and drone market was poised to swell from $129 billion this year to $241 billion by 2023. The COVID-19 contagion likely dampened that expectation in the meantime, but Fact.MR's decade-long, double-digit growth expectation suggests the industry will push past what's only going to be a temporary headwind.
Read more here:
Robotics Stocks Will Thrive in the Wake of COVID-19 - Motley Fool
- Robotics - Gizmag [Last Updated On: June 12th, 2016] [Originally Added On: June 12th, 2016]
- Download Microsoft Robotics Developer Studio 4 from ... [Last Updated On: June 16th, 2016] [Originally Added On: June 16th, 2016]
- Robotics News & Articles - IEEE Spectrum [Last Updated On: June 19th, 2016] [Originally Added On: June 19th, 2016]
- Robotics - Wikipedia, the free encyclopedia [Last Updated On: June 19th, 2016] [Originally Added On: June 19th, 2016]
- Robotics News & Articles - IEEE Spectrum [Last Updated On: June 19th, 2016] [Originally Added On: June 19th, 2016]
- RIA - Robotics Online - Industrial Robot Automation [Last Updated On: June 19th, 2016] [Originally Added On: June 19th, 2016]
- Three Laws of Robotics - Wikipedia, the free encyclopedia [Last Updated On: June 25th, 2016] [Originally Added On: June 25th, 2016]
- Robotics [Last Updated On: July 18th, 2016] [Originally Added On: July 18th, 2016]
- Houston Robotics [Last Updated On: August 12th, 2016] [Originally Added On: August 12th, 2016]
- Home - Illinois Tech Robotics [Last Updated On: August 27th, 2016] [Originally Added On: August 27th, 2016]
- Robotics - Wikibooks, open books for an open world [Last Updated On: September 8th, 2016] [Originally Added On: September 8th, 2016]
- JPL Robotics: Home Page [Last Updated On: September 8th, 2016] [Originally Added On: September 8th, 2016]
- ABB Robotics [Last Updated On: September 10th, 2016] [Originally Added On: September 10th, 2016]
- Softbank Robotics | Humanoid robotics & programmable robots [Last Updated On: September 29th, 2016] [Originally Added On: September 29th, 2016]
- Robotics - Wikipedia [Last Updated On: October 20th, 2016] [Originally Added On: October 20th, 2016]
- STEM Robotics 101 NXT | STEMRobotics [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Industrial Electronics and Robotics Technician [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Future of Robotics|Robots of the Future|Robot Links [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Industrial Robotics Training | School of Technology [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Robotics | An Open Access Journal from MDPI [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Robotics Technician & Automation Training - Online Course in ... [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Rich Hooper, PhD, PE: Robotics Engineer [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Robotics Toolbox - PeterCorke.com [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- ROBOTC | Robotics Academy [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- How have robots changed manufacturing? | HowStuffWorks [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Professional Development | Robotics Academy [Last Updated On: October 25th, 2016] [Originally Added On: October 25th, 2016]
- Robotics Academy [Last Updated On: December 14th, 2016] [Originally Added On: December 14th, 2016]
- KUKA Robotics | KUKA AG [Last Updated On: December 14th, 2016] [Originally Added On: December 14th, 2016]
- Robotics Engineer - Science Buddies [Last Updated On: December 24th, 2016] [Originally Added On: December 24th, 2016]
- Robotics - reddit [Last Updated On: January 10th, 2017] [Originally Added On: January 10th, 2017]
- Preorder Snap Flying Camera | Vantage Robotics [Last Updated On: January 25th, 2017] [Originally Added On: January 25th, 2017]
- Robotics - The Great Courses [Last Updated On: January 25th, 2017] [Originally Added On: January 25th, 2017]
- Belding hosts largest robotics competition in history of event - Greenville Daily News [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Robohub Digest 01/17: New year, new perspectives and forecasts for the year ahead in AI, machine learning and ... - Robohub [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Robotics-focused ETFs see big gains, Trump could hasten trend - MarketWatch [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Robotics competition events help teens express creativity - Monroe Evening News [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- First Tech Challenge: High schools battle in robotics competition - The Journal News | LoHud.com [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Gemini school robotics team wins in 'FIRST' competition - Chicago Tribune [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- TMRIES to impart robotics education - The Hindu - The Hindu [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Meridian robotics team gears up for Idaho FRC Regional - KBOI-TV [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- South High wins Volvo's robotics tournament - Herald-Mail Media [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Local robotics students headed to World Championship tournament - KOLO [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Oxford Hills robotics club to compete in North American championship - Lewiston Sun Journal [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Panther engineering and robotics team paves pathways to innovation - Clay County Free Press.com (subscription) [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Shopping robots on the march in Ocado - BBC News [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- OHS robotics club dazzles McKinley students - Southernminn.com [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Toyota Industries Acquires Warehouse Robotics Developer - WSJ - Wall Street Journal [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Rehab robotics field promises to return control, mobility to aging population - Arizona State University [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Mount Paran Christian School Robotics Team has engineered their way to State Competition - MDJOnline.com [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- 33C3: Edible Soft Robotics - Hackaday [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Keller students Starstruck on robotics - Fort Worth Star Telegram [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- WPI Robotics Team Has a Mission with Mars | News | WPI - WPI News [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Rethink's Robots Get Massive Software Upgrade, Rodney Brooks So Excited - IEEE Spectrum [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Front Porch: Vision Charter robotics teams perform well at state - Idaho Press-Tribune [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Raspberry Pi-powered arm: This kit aims to make robotics simple ... - TechRepublic [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Roam Robotics' lightweight, inexpensive exoskeleton for the masses - New Atlas [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Rehab robotics field promises to return control, mobility to aging population - ScienceBlog.com (blog) [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Rethink Robotics rethinks its software | ZDNet - ZDNet [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Home-schooled students studying robotics - Valencia County News Bulletin [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Botetourt 4-H Phoenix Robotics team sets sights on success - Roanoke Times [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Hartland robotics teams take on the FIRST Tech challenge at state competition - Lake Country Now [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- iFuture Robotics cuts manpower needs of warehouses with its mobile robots - YourStory.com [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Crescent Valley robotics focused on developing freshmen - Corvallis Gazette Times [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- CyPhy, Mitsubishi, and Soft Robotics Join Robo Madness on March 28 - Xconomy [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Agility Robotics Introduces Cassie, a Dynamic and Talented Robot ... - IEEE Spectrum [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- FIRST Robotics Competition - Wikipedia [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Raptor legs & human hips: Giant leap for walking robots - RT [Last Updated On: February 11th, 2017] [Originally Added On: February 11th, 2017]
- Patriot Robotics Alliance upsets Brentwood Academy Alliances - Clarksville Now [Last Updated On: February 11th, 2017] [Originally Added On: February 11th, 2017]
- South Beach robotics squad advances to super regionals - The Daily World [Last Updated On: February 11th, 2017] [Originally Added On: February 11th, 2017]
- How drones and robotics may shape the future of conflict under President Trump - PRI [Last Updated On: February 11th, 2017] [Originally Added On: February 11th, 2017]
- Personal robotics the next technological revolution: Dr Vivian Balakrishnan - Channel NewsAsia [Last Updated On: February 11th, 2017] [Originally Added On: February 11th, 2017]
- Ford Bets $1B on Startup Founded by Waymo, Uber Vets - ABC News [Last Updated On: February 11th, 2017] [Originally Added On: February 11th, 2017]
- Woodall robotics team competes in Broken Arrow - Muskogee Daily Phoenix [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Students Compete in LEGO Robotics Design Contest in Brooklyn - NY1 [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Essex County Freeholders Honor Livingston Robotics Club Teams - TAPinto.net [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Robotics event offers lesson in teamwork - Lewiston Morning Tribune (subscription) [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Face off: Marion students compete in robotics competition - The Exponent Telegram (press release) (registration) [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Freshman Caldwell team takes first place in Regional Robotics Tournament - Idaho Press-Tribune [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Ford Motor bets $1 billion on robotics startup - Toledo Blade [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Alice Shaw robotics team building invention to save wolves | Local ... - Lompoc Record [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]