Rockwell Automation, Inc. (ROK) and Xylem Inc. (XYL) are two prominent players in the industrial machinery sector, each driving innovation in automation and water technology respectively. While Rockwell focuses on digital transformation and control solutions, Xylem specializes in engineered water management systems. Their market overlap and commitment to sustainable industrial advancements make them compelling candidates for investment. In this article, I will analyze both companies to identify which offers the most promising opportunity for your portfolio.
Table of contents
Companies Overview
I will begin the comparison between Rockwell Automation and Xylem by providing an overview of these two companies and their main differences.
Rockwell Automation Overview
Rockwell Automation, Inc. focuses on industrial automation and digital transformation solutions globally. It operates through three segments: Intelligent Devices, Software & Control, and Lifecycle Services, offering hardware, software, and consulting services. The company serves diverse industries, including automotive, semiconductors, and eco-industrial sectors. Founded in 1903, Rockwell Automation is headquartered in Milwaukee, Wisconsin, with a market cap around 46B USD.
Xylem Overview
Xylem Inc. designs, manufactures, and services engineered products and solutions for water and wastewater applications globally. It operates in three segments: Water Infrastructure, Applied Water, and Measurement & Control Solutions, providing pumps, filtration, smart meters, and related software services. Incorporated in 2011 and based in Rye Brook, New York, Xylem has a market cap near 34B USD and focuses on water transportation and treatment technologies.
Key similarities and differences
Both Rockwell Automation and Xylem operate in the industrial machinery sector with a global footprint and diversified product portfolios. Rockwell emphasizes automation and digital transformation across multiple industries, while Xylem specializes in water-related engineered solutions. Rockwell’s services extend into consulting and lifecycle management, whereas Xylem integrates smart measurement and control systems with a focus on water infrastructure and treatment.
Income Statement Comparison
The table below compares key income statement metrics for Rockwell Automation, Inc. and Xylem Inc. for their most recent fiscal years, offering a snapshot of their financial performance.
| Metric | Rockwell Automation, Inc. | Xylem Inc. |
|---|---|---|
| Market Cap | 46.1B | 34.0B |
| Revenue | 8.34B | 8.56B |
| EBITDA | 1.40B | 1.69B |
| EBIT | 1.07B | 1.13B |
| Net Income | 869M | 890M |
| EPS | 7.69 | 3.67 |
| Fiscal Year | 2025 | 2024 |
Income Statement Interpretations
Rockwell Automation, Inc.
Rockwell Automation’s revenue showed moderate growth of 0.97% in the most recent year, reaching $8.34B, but net income declined by 9.64% to $869M. Gross margin improved to 48.14%, reflecting favorable cost control, while EBIT and net margins deteriorated. The latest fiscal year saw slower growth and margin compression, signaling operational challenges despite solid top-line stability.
Xylem Inc.
Xylem demonstrated strong revenue growth of 16.27% to $8.56B and a net income increase of 25.69% to $890M in its latest fiscal year. Margins improved notably, with gross margin at 37.51% and EBIT margin at 13.21%. Operating expenses grew proportionally with revenues, supporting scalable growth. Overall, Xylem’s income statement shows robust expansion and margin enhancement over the period.
Which one has the stronger fundamentals?
Xylem’s income statement fundamentals appear stronger, showing consistent favorable growth in revenue, net income, and margins over both the recent year and the overall period. In contrast, Rockwell Automation experienced mixed results with moderate revenue growth but declining net income and margin contraction, leading to an unfavorable overall income statement evaluation.
Financial Ratios Comparison
Below is a comparison of key financial ratios for Rockwell Automation, Inc. (ROK) and Xylem Inc. (XYL) based on the most recent fiscal year data available.
| Ratios | Rockwell Automation, Inc. (2025) | Xylem Inc. (2024) |
|---|---|---|
| ROE | 23.8% | 8.4% |
| ROIC | 13.7% | 5.8% |
| P/E | 45.3 | 31.6 |
| P/B | 10.8 | 2.64 |
| Current Ratio | 1.14 | 1.75 |
| Quick Ratio | 0.77 | 1.33 |
| D/E (Debt-to-Equity) | 1.00 | 0.20 |
| Debt-to-Assets | 32.5% | 12.9% |
| Interest Coverage | 9.1 | 22.9 |
| Asset Turnover | 0.74 | 0.52 |
| Fixed Asset Turnover | 6.95 | 7.43 |
| Payout Ratio | 68.0% | 39.3% |
| Dividend Yield | 1.50% | 1.24% |
Interpretation of the Ratios
Rockwell Automation, Inc.
Rockwell Automation shows several favorable profitability ratios including a strong return on equity (23.78%) and return on invested capital (13.71%), but faces challenges with high valuation multiples such as a PE of 45.33 and a PB of 10.78, which are unfavorable. Its liquidity ratios are mixed, with a neutral current ratio of 1.14 but an unfavorable quick ratio of 0.77. The company pays a dividend with a modest yield of 1.5%, supported by a balanced payout and free cash flow coverage, though valuation risks and leverage remain concerns.
Xylem Inc.
Xylem presents a solid liquidity position with favorable current (1.75) and quick ratios (1.33), and a low debt-to-equity of 0.2, indicating conservative leverage. Profitability ratios are weaker compared to Rockwell, highlighted by a lower ROE of 8.36% and neutral ROIC of 5.78%. Its valuation metrics are more moderate, with a PE of 31.63 and PB of 2.64. Xylem also pays dividends, yielding 1.24%, supported by stable cash flow and prudent capital management, reflecting a cautious approach to shareholder returns.
Which one has the best ratios?
Both companies exhibit slightly favorable overall ratio profiles, but Xylem scores better in liquidity and leverage, reducing financial risk. Rockwell shows stronger profitability and efficiency ratios but faces higher valuation multiples and weaker quick liquidity. The choice between them depends on prioritizing profitability versus financial stability, with neither company showing a clear superiority across all key metrics.
Strategic Positioning
This section compares the strategic positioning of Rockwell Automation, Inc. and Xylem Inc., including market position, key segments, and exposure to technological disruption:
Rockwell Automation, Inc.
- Leading industrial automation provider, facing competition in automation and machinery sectors.
- Diverse segments: Intelligent Devices, Software & Control, Lifecycle Services driving revenue.
- Invests in digital transformation, software, and connected services, addressing automation disruption.
Xylem Inc.
- Focused on water and wastewater solutions, competing in water infrastructure and applied water markets.
- Three main segments: Water Infrastructure, Applied Water, Measurement & Control Solutions.
- Emphasis on smart meters, analytics, and networked communication to innovate water management.
Rockwell Automation, Inc. vs Xylem Inc. Positioning
Rockwell Automation adopts a diversified industrial automation approach with hardware, software, and services across multiple markets. Xylem concentrates on engineered water solutions with specialized segments, showing a narrower but deep sector focus.
Which has the best competitive advantage?
Rockwell Automation exhibits a very favorable economic moat with growing profitability and value creation. Xylem shows slightly unfavorable moat status, shedding value despite improving profitability.
Stock Comparison
The stock price movements of Rockwell Automation, Inc. and Xylem Inc. over the past year reveal distinct bullish trends with differing momentum and trading volumes, highlighting varied investor confidence and market dynamics.
Trend Analysis
Rockwell Automation, Inc. (ROK) experienced a strong bullish trend over the past 12 months with a 46.76% price increase, showing acceleration and high volatility with a standard deviation of 44.57%. The stock hit a high of 410.53 and a low of 227.11.
Xylem Inc. (XYL) also posted a bullish trend over the past year, gaining 12.84%, but with deceleration and lower volatility at 9.45%. Its price ranged from 104.6 to 151.31, though recent months showed a slight downward trend with a -5.77% change.
Comparing both, Rockwell Automation delivered the highest market performance with a significantly larger price increase and accelerating momentum, while Xylem showed more moderate gains and recent weakness.
Target Prices
The current analyst consensus reveals promising upside potential for both Rockwell Automation, Inc. and Xylem Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Rockwell Automation, Inc. | 470 | 380 | 421.57 |
| Xylem Inc. | 178 | 150 | 169.43 |
Analysts expect Rockwell Automation’s price to rise moderately above its current $410.53, while Xylem shows a stronger upside from $139.69, indicating bullish sentiment for both stocks.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Rockwell Automation, Inc. (ROK) and Xylem Inc. (XYL):
Rating Comparison
ROK Rating
- Rating: B- indicating a very favorable overall evaluation by analysts.
- Discounted Cash Flow Score: Moderate score of 3, showing average valuation based on forecasts.
- ROE Score: Very favorable high score of 5, showing strong profit generation from equity.
- ROA Score: Favorable score of 4, reflecting good asset utilization effectiveness.
- Debt To Equity Score: Very unfavorable low score of 1, implying higher financial risk.
- Overall Score: Moderate score of 3, representing an average combined financial rating.
XYL Rating
- Rating: B reflecting a very favorable overall evaluation by analysts.
- Discounted Cash Flow Score: Moderate score of 3, suggesting similar valuation considerations.
- ROE Score: Moderate score of 3, indicating average efficiency in generating profit from equity.
- ROA Score: Favorable score of 4, indicating good efficiency in using assets to generate earnings.
- Debt To Equity Score: Moderate score of 3, signaling a more balanced debt level relative to equity.
- Overall Score: Moderate score of 3, also representing an average combined financial rating.
Which one is the best rated?
Based strictly on the provided data, XYL holds a higher overall rating (B vs. B-) with more balanced financial risk indicated by a better debt-to-equity score. However, ROK excels in return on equity, showing stronger profit efficiency. Both have similar overall and DCF scores.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for both companies:
ROK Scores
- Altman Z-Score: 5.32, indicating a safe zone status
- Piotroski Score: 8, classified as very strong
XYL Scores
- Altman Z-Score: 4.89, indicating a safe zone status
- Piotroski Score: 8, classified as very strong
Which company has the best scores?
Both Rockwell Automation and Xylem have Altman Z-Scores in the safe zone and identical Piotroski Scores classified as very strong. Their financial strength and bankruptcy risk indicators are therefore comparable based on the provided data.
Grades Comparison
Here is a comparison of the latest grades assigned to Rockwell Automation, Inc. and Xylem Inc. by recognized grading companies:
Rockwell Automation, Inc. Grades
The following table summarizes recent grade actions from major financial institutions for Rockwell Automation, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Wells Fargo | Maintain | Equal Weight | 2026-01-07 |
| Barclays | Maintain | Overweight | 2026-01-07 |
| Goldman Sachs | Upgrade | Neutral | 2025-12-16 |
| Jefferies | Maintain | Buy | 2025-12-10 |
| Citigroup | Maintain | Buy | 2025-12-08 |
| Barclays | Maintain | Overweight | 2025-12-04 |
| Baird | Maintain | Outperform | 2025-11-21 |
| B of A Securities | Maintain | Buy | 2025-11-20 |
| JP Morgan | Maintain | Neutral | 2025-11-11 |
| Morgan Stanley | Maintain | Overweight | 2025-11-10 |
Rockwell Automation’s grades generally indicate a stable to positive outlook, with multiple buy and overweight ratings and a notable upgrade from sell to neutral by Goldman Sachs.
Xylem Inc. Grades
The following table shows recent grade actions from leading financial institutions for Xylem Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | Maintain | Overweight | 2026-01-07 |
| Mizuho | Maintain | Neutral | 2026-01-05 |
| TD Cowen | Maintain | Hold | 2025-12-05 |
| UBS | Maintain | Buy | 2025-11-06 |
| RBC Capital | Maintain | Outperform | 2025-10-29 |
| Stifel | Maintain | Buy | 2025-10-29 |
| Barclays | Maintain | Overweight | 2025-10-29 |
| Citigroup | Maintain | Buy | 2025-10-29 |
| Citigroup | Maintain | Buy | 2025-10-09 |
| Mizuho | Maintain | Neutral | 2025-09-12 |
Xylem’s grades consistently reflect a positive consensus with numerous buy and outperform ratings, supported by stable overweight and neutral assessments.
Which company has the best grades?
Both companies hold a consensus rating of “Hold,” with Rockwell Automation showing a mix of buy, overweight, and neutral grades, while Xylem presents more frequent buy and outperform ratings. Investors may interpret Xylem’s stronger buy endorsements as a signal of higher confidence from analysts, whereas Rockwell Automation’s grades suggest a more cautious but stable outlook.
Strengths and Weaknesses
Below is a comparative table highlighting the key strengths and weaknesses of Rockwell Automation, Inc. (ROK) and Xylem Inc. (XYL) based on recent financial and operational data.
| Criterion | Rockwell Automation, Inc. (ROK) | Xylem Inc. (XYL) |
|---|---|---|
| Diversification | Balanced revenue from Intelligent Devices (3.76B), Lifecycle Services (2.20B), and Software & Control (2.38B) segments | Strong presence in Water Infrastructure (2.55B), Water Solutions & Services (2.34B), and Measurement & Control (1.87B) |
| Profitability | High net margin (10.42%), ROE (23.78%), ROIC (13.71%), consistent value creation and growing profitability | Moderate net margin (10.39%), lower ROE (8.36%), neutral ROIC (5.78%), currently shedding value but improving |
| Innovation | Strong software and control segment supports innovation, reflected in growing ROIC and favorable economic moat | Focus on applied water and measurement solutions supports innovation; growing ROIC but still slightly unfavorable moat |
| Global presence | Established global industrial automation footprint, supported by diverse product and service lines | Global water infrastructure and solutions presence, with steady revenue growth in key segments |
| Market Share | Leading position in industrial automation with diversified product lines and growing profitability | Significant market share in water solutions; competitive but facing profitability challenges |
Key takeaways: Rockwell Automation demonstrates a durable competitive advantage with strong profitability and balanced diversification, making it a more reliable value creator. Xylem shows promising growth and innovation in water infrastructure but currently struggles with profitability, warranting cautious monitoring.
Risk Analysis
Below is a comparative table of key risks for Rockwell Automation, Inc. (ROK) and Xylem Inc. (XYL) based on the latest available data from 2025 and 2024 respectively.
| Metric | Rockwell Automation, Inc. (ROK) | Xylem Inc. (XYL) |
|---|---|---|
| Market Risk | High beta at 1.52 suggests higher volatility versus market | Moderate beta at 1.17 indicates moderate market sensitivity |
| Debt Level | Moderate debt-to-assets 32.5%, debt-to-equity score very unfavorable | Low debt-to-assets 12.9%, debt-to-equity score moderate |
| Regulatory Risk | Industrial sector regulations, moderate exposure | Water infrastructure sector, subject to environmental regulations |
| Operational Risk | Diverse product and service segments may mitigate operational disruptions | Global operations in water tech with moderate operational complexity |
| Environmental Risk | Exposure in eco-industrial and process markets, moderate risk | Focus on water and wastewater solutions, heightened environmental compliance requirements |
| Geopolitical Risk | US-based with international sales, moderate exposure | US-based with international presence, moderate exposure |
The most impactful risks for Rockwell Automation include its high market volatility and relatively higher leverage, which may affect financial stability in downturns. Xylem benefits from lower leverage and strong liquidity but faces regulatory and environmental compliance risks due to its water infrastructure focus. Both companies maintain strong financial health scores, with safe Altman Z-Scores and very strong Piotroski scores, indicating sound fundamentals despite these risks.
Which Stock to Choose?
Rockwell Automation, Inc. (ROK) shows moderate revenue growth but declining net income and EPS over 2021-2025. Its profitability ratios such as ROE (23.78%) and ROIC (13.71%) are favorable, with a solid interest coverage. However, valuation multiples and debt levels are unfavorable. The company is rated B- with a very favorable overall rating and demonstrates a very favorable moat with growing ROIC above WACC.
Xylem Inc. (XYL) exhibits strong revenue and net income growth with consistently favorable income statement metrics. Profitability ratios are lower than ROK’s, with ROE at 8.36% and ROIC at 5.78%, and debt levels are low and favorable. The rating is B with a very favorable overall status. Despite growing ROIC, the company’s moat is slightly unfavorable due to ROIC below WACC.
Considering ratings and financial evaluations, ROK could appear more attractive for investors seeking high profitability and a strong economic moat, despite some valuation concerns. Conversely, XYL may appeal to those valuing steady growth and financial stability with lower leverage. The choice might depend on an investor’s risk tolerance and preference for growth versus stability.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Rockwell Automation, Inc. and Xylem Inc. to enhance your investment decisions:
