* Q3 EPS from continuing ops $1.22 v. $1.19 Street view
* Raises FY2011 EPS forecast to $4.55-$4.65
* Cites 'ongoing economic recovery'
* Shares down 2 percent (Rewrites first paragraph, adds quote, updates stock)
By Scott Malone
BOSTON, July 28 Rockwell Automation Inc (ROK.N) posted quarterly earnings that topped Wall Street's estimates, helped by a lower-than-expected tax rate, and raised its 2011 earnings forecast.
The company said on Thursday that growth rates might begin to slow in the coming months.
"We are now nine quarters into the recovery," said Chief Executive Officer Keith Nosbusch, "and market growth rates are moderating, just as we would expect at this stage."
Overall demand is rising, and sales in China and the United States were up in the latest quarter from the prior period, Nosbusch said.
His view was more upbeat than that of rival Emerson Electric Co (EMR.N), which warned on Wednesday that U.S. and European economies had entered a soft patch in the last two months, spooking investors and sending industrial shares down. [ID:nN1E76Q132]
Rockwell sells most of its products shortly after they are ordered, giving it a less accurate way to estimate future sales than companies with year-long backlogs, Nosbusch acknowledged.
"We don't have a backlog that tells us everything is going to be great," he said in an interview. "In our business, 70 percent is book and bill in the same month, so if there is a change it could be quick."
Rockwell now expects to record fiscal 2011 earnings per share of $4.55 to $4.65, which it said would represent growth of about 50 percent. Wall Street expects $4.58.
The revision reflected the weakening dollar and a lower tax rate -- Rockwell now expects its full-year tax rate to be between 19 percent and 20 percent, down from its prior forecast of 20 percent to 21 percent.
"They've tightened up the range comfortably and, relative to us, it was a little bit ahead of what we expected," said analyst Richard Eastman of Robert W. Baird & Co in Milwaukee. "From our perspective, this was an in-line quarter."
The shares declined 2 percent to $75.24 on the New York Stock Exchange amid concern that the higher profit forecast reflect a lower tax rate more than improved demand.
PROFIT, REVENUE UP
Rockwell posted earnings of $179.5 million, or $1.23 per share, for the third quarter that ended on June 30, compared with $119.4 million, or 83 cents per share, a year earlier.
Profit per share from continuing operations came to $1.22, above the analysts' average forecast of $1.19, according to Thomson Reuters I/B/E/S.
Revenue rose 19.6 percent to $1.52 billion from $1.27 billion. Six percentage points of the growth resulted from the weakening of the dollar, which made the Milwaukee-based company's foreign sales more valuable when translated back into its home currency.
Rockwell also competes with Germany's Siemens AG (SIEGn.DE) and Japan's Mitsubishi Electric Corp (6503.T).
Four months after the devastating Japan earthquake and nuclear crisis, the company no longer expects the aftermath to have a meaningful long-term effect on its supply chain, Nosbusch said. Earlier in the year, Rockwell warned that damage to Japanese makers of electronic components could hurt its supplies.
At Wednesday's close, Rockwell shares had risen by 45 percent over the last year, outperforming gains of 17 percent for the Standard & Poor's capital goods industry index .GSPIC and 19.5 percent for the broader U.S. stock market. (Reporting by Scott Malone, editing by Gerald E. McCormick, Lisa Von Ahn and Gunna Dickson)