If you have already considered how and why to invest in robotics stocks, this may be a good time to turn your attention to learning more about the market's largest robotics stocks. Their size is a good indication that investors are interested in buying what they have to offer. Let's take a look at them.
The 10 Biggest Robot Shares
As we detailed the top 10 robotics choices, there quickly became some ideas. For example, buying into mainstream robotics automation stocks usually means taking on specific geographical and industrial exposures, namely the automotive and consumer electronics industries, as well as strong exposure to Asia / China. It's good if you want it, but you have to think outside the box to avoid it. The list of robotics stocks in this article is intended to help with that.
The list contains a mix of purely gaming robotics and automation companies, but in reality robotics is just a subset of factory automation. It makes sense when you consider that the International Organization for Standardization (ISO) defines a robot as "an auto-controlled, reprogrammable, multi-purpose manipulator programmable in three or more axes, which can be fixed in place or mobile in industrial automation applications." [1
Since it is impossible to find purely gaming robotics companies, the following list is not compiled solely on the market valuation basis. Instead, it encompasses the largest companies by market value – that is, the value of the IPO – within a specific robotics theme. For example, Yaskawa Fanuc and ABB are the largest players in industrial robotics.
Next to ABB, Siemens and Rockwell are the leading players in the closely related field of automation. Cognex is the largest company in its machine vision niche, and KION is the largest supply chain automation company. Intuitive Surgical and iRobot have first-class advantage in and dominate their niches.
In a nutshell, all these companies are # 1 or # 2 in their specific market. sites and together form the top 10 for the purposes of this article.
|1. Yaskawa (OTC: YASKY)||Japan||Leading Robotics and Automation Company with Good Exposure to China / Far East Production|
|2. Fanuc (OTC: FANUY)||Japan||Leading Robot Company with Good Exposure to China / Far East Production|
|3. ABB (NYSE: ABB)||Switzerland and Sweden||Major robotics, electrification products, and industrial automation company|
|4. Siemens (OTC: SIEGY)||Germany||Large industrial conglomerate that shifts focus towards automation and smart factory solutions|
|5. Rockwell Automation (NYSE: ROK)||U.S.||The leading US industrial automation company with a fast growing Industrial Internet of Things company|
|6. Cognex (NASDAQ: CGNX)||U.S.||World leading machine vision company|
|7. Zebra Technologies (NASDAQ: ZBRA)||U.S.||Scanners, mobile computers and barcode scanners that support smart robotics / automation|
|8. KION Group (OTC: KIGRY)||Germany||Manufacturer of forklift truck and leading warehouse automation company|
|9. Intuitive Surgical (NASDAQ: ISRG)||U.S.||Manufacturer of the market-leading robotic surgical system da Vinci|
|10. iRobot (NASDAQ: IRBT)||U.S.||Consumer robot company dominating the robot vacuum cleaner market|
1. Yaskawa and 2nd Fanuc: Japanese Robotics Playing
Four companies dominate the general industrial robotics market: Fanuc, Yaskawa, Kuka (OTC: KUKAF) and ABB. What is immediately noticeable is that none of the four are based in the United States. Kuka is a German company now owned by China's Midea Group, and ABB is a Swiss-Swedish company with a stock exchange listing in these countries and also in New York (more on ABB later).
The fact that two Japanese companies, Fanuc and Yaskawa, are leaders in robotics is proof of the importance of Asia to the robot world. In fact, according to the International Federation of Robotics (IFR), only five countries make up 73% of global demand for robotic devices, and three of them (China, Japan and Korea make up almost 60% of global demand) are in Asia. Also, as the chart below shows, five of the top eight are in Asia. Also note China's share of production among the top eight.
The figures in the chart somewhat reflect the geographical sales mix of Fanuc and Yaskawa. For example, Yaskawa tends to generate around 60% of sales of industrial robots from Asia, with China and Japan contributing 24% and 22% respectively. Similarly, around 62% of Fanuc's automation and robot sales come from Asian countries (Japan contributes 26% and China 17%).
China smiles greatly at the prospects of both companies. Although the country is already the largest market for industrial robots, the so-called robot density is much lower, which indicates that there is good room for growth. Robot density is defined by IFR as the number of robots installed per 10,000 employees in the industry – a measure of how automated a country's production production is.
As you can see below, China is still hanging around its neighbors and producing competitors, so there should be plenty of growth opportunities from the country for Fanuc and Yaskawa.
However, one thing investors need to watch out for – and this argument also applies to ABB, Siemens, Cognex and Rockwell Automation – is that robotics (and to a lesser extent the overall industrial automation market) has exposure to specific end markets. It's not good when those industries refuse. To illustrate this, here is a look at the proportion of robots used by industry globally from 2015 to 2017.
As You can see, the automotive and electrical / electronics industries account for about two-thirds of demand. This is fine, but investors should note that Fanuc and Yaskawa both began to report double-digit sales declines in 2019 as global car production turned negative and consumer electronics (especially smartphone production) faced significant headwinds.
Put all this together, an investment in Fanuc and Yaskawa is truly a spectacle of the growing use of robotics in the emerging manufacturing economies of Asia. However, potential investors should be prepared for volatility due to their dependence on automotive production and the electronics / electronics industry.
3. ABB is in transition mode
The two European industrial giants – ABB and Siemens – share many things in common. Both are major players in the factory automation and process automation markets. A reminder of process automation involves automatic control of raw materials. Some examples of this include petrochemical refining, chemical processing and water treatment. Furthermore, both companies' automation companies are only part of a larger company.
However, the good news for robot trailers is that the revenues of both companies are more focused on industrial automation, robotics and smart manufacturing in the future.
ABB is a company in transition. After years of poor performance and a sense that the company's performance did not match its potential, management decided to seize and sell its underperforming power grid to Hitachi and push further by digitizing its solutions and investing in partnerships, which it with industrial engineering software company Dassault Systemes (OTC: DASTY) to create so-called digital twin solutions. In a nutshell, a digital twin is a virtual copy of physical assets (such as a gas turbine or tapping plant), which can then be simulated to operate in different ways and determine the most efficient way to operate the physical asset. Dassult's software platforms enable digital twin creation, which should then add value to the robotics automation solutions – making ABB's offerings more valuable to customers.
In addition, ABB reorganized the business segments and changed its CEO in 2019 as they decided to ditch their long-standing matrix management structure. It is quite clear that there is a lot of upheaval at ABB, so investors in the stock will have to appreciate that they buy a turnaround as much as they play for the growth of robotics and factory automation.
4. Siemens also restructures
ABB's automation rival Siemens is also in a hurry to restructure. It sold a 15% stake in the health care system, Siemens Healthineers and the handsome shares in the renewable business, Siemens Gamesa leaving only 59% ownership. Meanwhile, the management tried to merge the mobility (railway trains, locomotives, buses and equipment) with Alstom . Furthermore, Siemens will start its gas and power business and merge it with Siemens Gamesa.
Everything points to a business and investment that is more focused on two segments: digital industries (factory automation, motion control, process automation, and industrial software) and smart infrastructure (smart building solutions and network distribution systems).
In short, Siemens is becoming more of an automation game. Similar to ABB, the focus is on developing smart digital solutions in line with the development of "Industry 4.0." By reference, the first industrial revolution involved the use of steam and power, the second used electrification, and the third involved computers and automation. Industry 4.0 uses network-enabled devices and Industrial Internet of Things (IIoT) to create smart factories that can be monitored, controlled and iteratively adjusted by a control system.
As such, an investment in Siemens is an investment in an industrial conglomerate that is slowly transforming into a company focused on automation and the software needed to run it. ABB is already a much more focused robotics and automation company, but it's only worth a share if you think management will turn the company around as expected.
5. Rockwell Automation
The leading American company on the robotics stock list and also the most focused automation game, Rockwell Automation is arguably the most interesting strategic asset in the industry. Process Automation Focused Professionals Emerson Electric (NYSE: EMR) tried to take over the company in 2017. The idea was to add Rockwell's factory automation solutions to Emerson's process automation force and create a de facto US champion.
In the rejection of the takeover offer, Rockwell decided to forge its own future and focus on factory automation and expand the so-called connected enterprise – really just Rockwell's way of talking about smart manufacturing (Industry 4.0 solutions). The company's associated business revenue was around $ 300 million in 2018 (around 4.5% of total revenue), and management expects it to grow at a double-digit pace and more than double the next four years.
Rockwell's long-term outlook looks excellent, but investors must be willing to accept that the company's sales pitch will fluctuate in line with the economy. As you can see in the chart below about the sales trends in the decade following the 2008-2009 recession, Rockwell's sales growth has been up and down, but the trend is positive.
Also, one of the great things Rockwell Automation has done for it is an excellent record of free cash flow (FCF) conversion from net income, and it is likely to improve in the future given that half of the connected business tends to be recurring revenue.
All in all, Rockwell has good prospects, but investors must be willing to cycle up and down the business cycle.
Cognex dominates the machine vision market, with the main competition being Japan's Keyence . Cognex's 2D and 3D vision systems are needed to guide automated equipment and robots, as well as monitor and control automated processes. The products are used in industrial production (Cognex's traditional core industries are automotive and consumer electronics, with Apple as the largest customer), the logistics market for identifying packages, and even in the handling of luggage storage.
such, Cognex is a play about the growing use of automation in production and logistics, especially if it involves gathering more information as part of Industry 4.0. In fact, machine vision is a critical part of Industry 4.0, since it is impossible to process and trade on production data if you cannot capture them in the first place. Similarly, machine vision is required to monitor the automated process.
Management sees a long runway of growth ahead, with a total addressable market of around $ 3.5 billion, compared to a company's turnover of around $ 800 million at the end of the decade. . For reference, management claims an between 20% share of the 2D vision market and a just over 10% share of factory automation, with the other end market shares in single digits. In other words, Cognex has a significant market to grow into.
Cognex management believes the company can grow its factory automation revenues by 20% a year. in the long term and its logistics revenues (driven by the growth of e-fulfillment centers) by 50% a year in the near future.
The company is undoubtedly a long-term growth story. But again, the dependence on two important end markets (automotive and consumer electronics) can challenge Cognex's growth efforts. For example, revenue growth in the period 2018-2020 stagnated due to a combination of declining light vehicle production and declining smartphone production, leading to a break in capital expenditure in those industries.
Despite this, the company's long-term future looks insured, and investors who are confident of the outlook will see any short-term disruption as creating a potential buying opportunity in the stock.
7. Zebra Technologies
Cognex's expected 50% annual growth rate in logistics is a symbol of the potential for growth in the logistics and warehouse automation market. This is driven by the need for e-fulfillment and advances in robotics to make automated logistics and inventory more productive. Zebra Technologies and Germany's KION are not purely gaming robotics companies, but the demand for their products is driven by consumer trends in robotics investment.
If Industry 4.0 and the growing use of robotics will lead to a lot of information created by web-enabled devices, machines and smart factories, there will also be a need to capture information through Zebra's mobile computers, scanners and barcodes. Whether it is a manufacturing and logistics environment, a health environment or a retail environment, human involvement will be needed to capture data to facilitate automated processes. A simple example of this need is the increasing use of handheld barcode readers in a warehouse.
Zebra's revenue mix also makes it one of the least unstable (downside and upside) names in this list. It provides a nice split between retail and e-commerce, transport and logistics, and production revenue (with health care and other assorted end markets playing a minor role). Meanwhile, its strong geographical exposure to North America (nearly 50% of sales) and Europe (around one-third) make it subject to adoption of Industry 4.0 in these regions rather than overall growth in Asia.
Management expects it to increase revenue by 4% to 6% on an annual basis over the long term. And just like Rockwell Automation, Zebra is historically very good at converting revenue to FCF.
8. KION Group
Germany's KION is probably not a well-known company in the United States, but it is the second largest supplier of industrial trucks (forklifts) in the world and market leader in Europe. It is also the world's leading supply chain automation system company through its Dematic business.
The combination of industrial trucks and supply chain solutions (automation) makes it an important player in the growth of warehouse automation. This may not sound like the sexiest of the end markets, but consider that almost half of the demand for KION's supply chain solutions comes from e-commerce. Management expects high single-digit revenue growth from the segment in the long term.
The outlook for the second segment (industrial trucks and services) is more tied to the general industrial conditions in Europe, especially as the region is responsible for about 68% of the industrial truck segment's sales. However, almost half of the segment's revenue comes from services, which should be more resilient in an economic downturn.
Given that the industrial truck segment accounts for around 74% of the company's global revenue, it is fair to say that KION is a company whose potential customers are linked to the European industrial economy but have a growth kicker linked to it from the supply chain. automation and robotics in the United States. It is not a bad combination if you can get the stock a good valuation.
9. Intuitive Surgical and 10. iRobot
The two companies operate in widely different end markets (robotic surgical procedures and robotic vacuum cleaners), but they actually have a lot in common. Both companies are American and offer investors in robotics a way to invest that is not related to the business cycle of the traditional automation markets (such as automotive and electronics). In addition, both shares are their industry leaders and increase revenues by an annual percentage rate in their mid-teens.
In the In terms of Intuitive Surgical, the most important growth driver is how well it can expand its installed base of da Vinci robotic surgery systems. This in turn will increase the instruments and service revenues. This is particularly relevant given that a much larger rival, Medtronic is increasingly entering the market for robotic surgery systems.
There are probably two important ways Intuitive Surgical can do this. The first is through its operational leasing program, which allows customers to start or improve their existing robotic surgery programs without having to take part in the significant initial capital investment. This is important because it allows the medical facility to build the scope of its services to pay for the equipment in the long term. The second way is by increasing the procedural categories it can be used in, as well as the surgeon's knowledge of performing robotic surgeries.
Intuitively is not one of the stocks that investors will ever buy cheap on conventional metrics, but if you believe in the long-term growth history – and if it can sustain growth in its mid-teens – then it has the potential to grow to be appreciated.
and it dominates the Robot Vacuum Cleaner (RVC) market, with a 82% market share in North America, a 61% share in Europe, the Middle East and Africa and 64% in Japan. In fact, its global market share is 52% (70% if you exclude China).
The company's dominant position means that it is ideally placed to take advantage of the growing interest in RVC from those who own a more traditional vacuum cleaner. iRobot sees the overall global vacuum cleaner market to be worth around $ 10 billion at present. RVCs had a 24% stake at the end of 2018, but interest is growing, and iRobot plans to capture a significant portion of interest. IRobot's growth potential is not just limited to RVC. It also plans to expand sales of its rugged floor mops and robotic lawnmowers.
iRobot offers everything, investors a way to profit from consumer adoption of home robot technology. In combination with Intuitive Surgical, this means that iRobot's equity perspectives are more dependent on market penetration and technological adoption than they are on the overall economy or what is happening in the automotive industry or in China. For robotics investors, it can provide a diversity for a robotics-related portfolio.
Investing in robotics
In summary, there is a nice mix of pure gaming robotics companies (Fanuc and Yaskawa), leading automation companies (ABB, Siemens, Rockwell), a niche technology supplier (Cognex), some robotics / automation support companies (Zebra and KION), and specific industrial robot games (Intuitive Surgical and iRobot) in the list of the top 10 robotic companies. It's a good place to start fine-tuning which robotic companies you might want to consider investing in.