$ROK daily pick: sell Dec 18 $350 put (buy-side) after the tariff-refund sales miss

$ROK: I'm selling the Dec 18 $350 put on @ROKAutomation after a sales miss that was mostly a tariff refund to customers.

As of Friday's close ($375.86, markets closed for the weekend):
12% under the 200-day
About 25x the $15 fiscal 2027 EPS guide midpoint
$5.20 credit, breakeven $344.80 (under the 52-week low)
About 1.5% in 40 days (~13.6% annualized)

I think the 14% drop is overdone because the $85M refund accrual was bigger than the whole revenue miss and core sales growth was 7% in the quarter.

If I get assigned I own Rockwell under its March low and that is a price I would pay anyway.

Not financial advice

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What happened: on Nov 5 Rockwell reported adjusted EPS of $3.88 vs $3.69 estimated but sales of $2.33B missed the $2.41B consensus. Rockwell got $103M of IEEPA tariffs back from the government and booked an $85M refund to customers as a reduction of sales. Add that back and sales were about $2.42B. The stock fell 14.2% that day and another 1.4% on Friday.

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Why a put and not the stock: Rockwell still trades around 25x next year's earnings so I would rather get paid to wait for a lower price. The $350 strike sits right at the $347.53 low from March 30 and breakeven is $344.80, 8.3% under Friday's close. Fiscal 2026 adjusted EPS grew 27% to $13.42 and free cash flow was $1.7B.

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The risk: the EPS beat includes a $0.11 tariff refund benefit so the quarter is a little less clean than the headline. The 2027 guide of $14.50 to $15.50 only brackets the $14.92 consensus. Most analysts rate it a Hold (28 Hold, 11 Buy, 2 Sell per FMP). Friday's closing quote was wide at $5.20 bid and $9.00 ask so I would work a limit order Monday and not chase.

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What I'd watch: the Nov 18 investor meeting where management plans to update long-term margin targets. The Dec 18 expiry comes before the next report which FMP has around Feb 4. The quarterly dividend is $1.45 which works out to about 1.5% a year at this price.

Sources: Rockwell official: Q4 FY26 adj EPS $3.88, $85M customer tariff refund accrual, FY27 adj EPS guide $14.50-$15.50 · SEC 8-K Ex.99: Q4 sales $2,332M, FY26 adj EPS $13.42 (+27%), FCF $1,701M · TIKR: sales $2.33B vs $2.41B est; ex-refund $2.42B; FY27 guide brackets $14.92 consensus · Q4 FY26 call transcript: core sales growth 7%, margin targets at Investor Day · ChartMill: revenue miss overshadows earnings beat; FY27 guide vs consensus · Finviz: tariff-distorted revenue miss, FY27 guide detail

Not financial advice. For informational and educational purposes only.