3 Automation Stocks Driving the Future of Manufacturing

Automation has become essential in today’s economy because it increases productivity, efficiency and quality while helping companies overcome economic challenges. AI-driven solutions such as autonomous robots and machine learning streamline processes, reduce costs, increase quality and reshape manufacturing.

To capitalize on this trend, investors could consider top automation stocks like Intuitive Surgical, Inc. (ISRG), Honeywell International Inc. (HON), and Rockwell Automation, Inc. (ROK) that are leading the future of manufacturing.

Automation is transforming healthcare, aerospace and manufacturing through advances in building systems, sustainable energy and digital solutions. By addressing labor shortages and allowing employees to focus on higher-skilled tasks, 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, estimated at $2.04 billion in 2024, is expected to reach $13.45 billion by 2034, growing at a CAGR of 20.75% . This growth highlights innovations in healthcare to improve patient experiences, reduce costs and accurate diagnoses, as well as advances in industrial robotics to increase efficiency, reduce labor and improve workplace safety.

Additionally, with the Industry 4.0 automation revolution, manufacturing is poised for efficiency and productivity gains, faster time to market, cost savings, improved decision making and optimized supply chains. Due to this potential, the industrial machinery market is expected to grow at a CAGR of 7.5% from 2024 to 2032.

With these trends in mind, let’s evaluate the fundamentals of the automation stocks mentioned above.

Intuitive Surgical, Inc. (ISRG)

ISRG develops, produces and markets products that enable physicians and healthcare providers to improve the quality and access to minimally invasive care internationally. The company offers the da Vinci Surgical System and the Ion Endoluminal System.

Based on the leveraged FCF margin over the last 12 months, ISRG stands at 8.10%, 277.3% higher than the industry average of 2.15%. Likewise, capital expenditure/sales in the last 12 months at 15.69% is 386.5% higher than the industry average of 3.23%. Furthermore, the company’s EBIT margin in the last 12 months was 26.24%, well above the industry average of 2.29%.

ISRG’s total revenue increased 17% year-over-year to $2.04 billion in the third quarter ended September 30, 2024. Non-GAAP net income attributable to ISRG was $669.10 million, or $1.84 per share, an increase of 27.7% and 26%, respectively, from the prior-year quarter. Additionally, the company’s non-GAAP operating income increased slightly year-over-year to $754.90 million.

Street expects ISRG’s EPS and revenue for the quarter ended December 31, 2024 to increase 9.5% and 14.1% year-over-year to $1.75 billion and $2.20 billion, respectively. It beat Street EPS estimates in each of the last four quarters. The stock has gained 88.1% over the past year, closing the most recent trading session at $524.28.

ISRG’s POWR Ratings reflect strong fundamentals. The POWR Ratings evaluate stocks based on 118 different factors, each with its own weighting.

It ranks #79 out of 138 stocks in the Medical – Devices & Equipment industry. It has an A grade for sentiment. To view ISRG’s Growth, Value, Momentum, Stability and Quality Ratings, click here.

Honeywell International Inc. (HON)

HON operates internationally in the areas of aerospace technologies, building automation, energy and sustainable solutions and industrial automation. The company operates through the Aerospace, Honeywell Building Technologies, Performance Materials and Technologies and Safety and Productivity Solutions segments.

Based on the EBIT margin of the last 12 months, HON is 20.89%, 104.3% above the industry average of 10.23%. Likewise, the company’s return on assets over the last 12 months is 7.73%, 46.9% higher than the industry average of 5.26%. Additionally, the leveraged FCF margin of 10.07% over the last 12 months is 54.5% higher than the industry average of 6.52%.

In the third quarter ended September 30, 2024, HON’s net sales increased 8.5% year-over-year to $9.73 billion. Likewise, segment profit rose 5.8% year-on-year to $2.30 billion. HON’s adjusted earnings per share were $2.58, an increase of 8.4% from the year-ago period. Additionally, the company’s free cash flow was $1.72 billion, up 10.1% year over year.

For the quarter ended December 31, 2024, HON’s earnings per share and revenue are expected to increase 7% and 8.5% year-over-year to $2.78 billion and $10.24 billion, respectively. HON beat consensus EPS estimates in each of the last four quarters. Over the past year, the stock has gained 16.6%, closing the most recent trading session at $217.50.

HON’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.

HON has a grade of B for dynamics and stability. It ranks 24th out of 79 stocks in the A-rated Industrial – Machinery sector. Click here to access more reviews of HON for Growth, Value, Sentiment and Quality.

Rockwell Automation, Inc. (ROK)

ROK provides industrial automation and digital transformation solutions in North America, Europe, the Middle East, Africa, Asia Pacific and Latin America. The company operates through three segments: Smart Devices, Software & Controls and Lifecycle Services. Solutions include hardware, software products and services.

On October 29, 2024, ROK announced FactoryTalk DataMosaix App Builder, a low/no-code tool for building 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 greater productivity.

On October 15, 2024, ROK announced advancements to its FactoryTalk Optix portfolio with DataReady intelligent machines that enhance real-time insights, seamless data transfer and edge-to-cloud analytics for improved operational efficiency. This update provides users with enhanced visualization, HMI and data exchange capabilities for various industrial applications.

In terms of gross profit margin for the last 12 months, ROK stands at 39.83%, 25.5% higher than the industry average of 31.73%. Its trailing 12-month EBITDA margin of 20.40% is 46.4% higher than the industry average of 13.94%. Likewise, the share’s EBIT margin in the last 12 months was 17.07%, 66.9% above the industry average of 10.23%.

ROK’s total revenue for the third quarter ended September 30, 2024 was $2.04 billion. The company’s gross profit was $770.60 million. Additionally, adjusted net income and adjusted earnings per share were $281.90 million and $2.47, respectively.

Analysts expect ROK’s earnings per share and revenue for the quarter ended June 30, 2025 to rise 2.9% and 4.7% year-over-year to $2.79 billion and $2.15 billion, respectively will rise. Street EPS estimates have been beaten in three of the last four quarters. Over the past three months, ROK stock has risen 11.2%, closing the most recent trading session at $277.09.

ROK’s POWR Ratings reflect a robust outlook. It ranks 58th in the Industry – Machinery industry. It has a grade of B for dynamics and quality. Click here to see ROK’s Growth, Value, Stability and Sentiment Ratings.

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ISRG shares were flat in after-hours trading on Friday. Year-to-date, ISRG has gained 59.01%, while the benchmark S&P 500 index has gained 27.04% over the same period.

About the Author: Abhishek Bhuyan

Abhishek started his professional career as a financial journalist due to his keen interest in identifying the fundamental factors that influence the future performance of financial instruments. More…

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