Regal Rexnord Corp
NYSE:RRX
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Intrinsic Value
The intrinsic value of one RRX stock under the Base Case scenario is 172.11 USD. Compared to the current market price of 181.17 USD, Regal Rexnord Corp is Overvalued by 5%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
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Regal Rexnord Corp
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Fundamental Analysis
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Regal Rexnord Corp
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Regal Rexnord Corp., formed through the merger of Regal Beloit and Rexnord's Motion Control Solutions business, has positioned itself as a formidable player in the industrial technology sector. With a rich heritage that spans over a century, the company specializes in designing innovative power transmission and motion control solutions across a diverse array of sectors, including aerospace, automotive, and construction. Regal Rexnord prides itself on its commitment to operational excellence and customer focus, leveraging strong engineering capabilities and a broad portfolio of trusted brands. As global industries increasingly prioritize efficiency and sustainability, Regal Rexnord's cutting-...
Regal Rexnord Corp., formed through the merger of Regal Beloit and Rexnord's Motion Control Solutions business, has positioned itself as a formidable player in the industrial technology sector. With a rich heritage that spans over a century, the company specializes in designing innovative power transmission and motion control solutions across a diverse array of sectors, including aerospace, automotive, and construction. Regal Rexnord prides itself on its commitment to operational excellence and customer focus, leveraging strong engineering capabilities and a broad portfolio of trusted brands. As global industries increasingly prioritize efficiency and sustainability, Regal Rexnord's cutting-edge products and solutions, such as electric motors and conveyor systems, are designed not only to enhance performance but also to reduce environmental impact, making them a compelling choice for businesses looking to future-proof their operations.
For investors, Regal Rexnord represents an exciting opportunity within a growing market. The company's strategic focus on operational efficiency, combined with the booming trends of automation and energy-saving solutions, positions it favorably for long-term growth. Its strong balance sheet allows for significant investments in research and development, ensuring that the company remains at the forefront of innovation. As Regal Rexnord continues to expand its footprint globally and tap into emerging markets, its dedication to delivering value through quality products and customer partnerships makes it an appealing investment case. With a solid foundation and clear growth trajectory, Regal Rexnord invites investors to join in its journey as it helps shape the industries of tomorrow.
Regal Rexnord Corporation is a diversified industrial company that focuses on the manufacturing and distribution of motion control and power transmission solutions. The company's core business segments typically include:
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Motion Control:
- This segment includes products like motors, gears, drives, and other components that are essential for controlling movement in machinery and equipment. Applications for these products can be found in industries such as automation, aerospace, and automotive.
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Power Transmission:
- Regal Rexnord produces various power transmission components, including bearings, couplings, chains, and conveyor systems. These products are crucial for facilitating the movement of power and machinery across many sectors, including manufacturing, material handling, and food processing.
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Commercial Systems:
- Within this segment, Regal Rexnord provides solutions for commercial HVAC (Heating, Ventilation, and Air Conditioning) systems, as well as other system components for industries such as construction and facility maintenance.
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Industrial Solutions:
- This encompasses a broad range of products and services designed for industrial applications, such as pumps, fans, and other equipment. The focus here may be on improving efficiency, reliability, and performance in manufacturing processes.
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Aerospace and Defense:
- While not the largest segment, Regal Rexnord is involved in providing components and systems for aerospace and defense applications, which may include precision devices and systems that meet stringent industry standards.
Each of these segments plays a crucial role in the overall operations of Regal Rexnord, contributing to its growth strategy and market presence. The company focuses on innovation and customer collaboration to create solutions that enhance performance and efficiency across various industries.
Regal Rexnord Corp., a global leader in electric motors, power transmission, and control systems, possesses several competitive advantages that set it apart from its rivals:
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Diversified Product Offerings: Regal Rexnord has a wide range of products catering to various industries, including HVAC, industrial, and commercial applications. This diversification allows the company to reduce reliance on any single market and adapt to changing customer needs.
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Strong Brand Recognition: The company has established strong brand equity through decades of service and innovation. Brands under Regal Rexnord are associated with quality and reliability, which can enhance customer loyalty.
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Innovative Technology: Regal Rexnord invests heavily in research and development, allowing it to stay at the forefront of new technologies such as IoT-enabled solutions and energy-efficient products. This keeps them competitive in an evolving marketplace.
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Robust Supply Chain and Manufacturing: The company's extensive manufacturing capabilities, optimized supply chain management, and global production facilities enable it to deliver products at competitive costs and respond quickly to market demands.
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Customer Focus and Service: Regal Rexnord’s commitment to customer service through tailored solutions and aftermarket support helps build long-term relationships, which can be a significant competitive advantage in the industrial sector.
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Strategic Acquisitions: The company has a track record of successful acquisitions that enhance its product portfolio and market share. This strategy allows Regal Rexnord to quickly enter new markets and leverage synergies.
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Global Reach with Local Expertise: Its presence in multiple geographies allows the company to tap into various markets effectively. Localized knowledge helps tailor solutions to regional needs, enhancing customer satisfaction and market penetration.
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Focus on Sustainability: With increasing attention on environmental impact, Regal Rexnord's commitment to energy-efficient products positions it well with customers prioritizing sustainability, offering a competitive edge.
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Strong Financial Position: Regal Rexnord has demonstrated financial stability and a history of strong cash flows, allowing for reinvestment into growth initiatives and the ability to weather economic downturns better than some competitors.
These unique competitive advantages contribute to Regal Rexnord's ability to maintain a leading position in its industry while adapting to market changes and customer demands.
Regal Rexnord Corp, like many companies in the industrial sector, faces a variety of risks and challenges that could impact its performance in the near future. Here are some of the key risks and challenges to consider:
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Supply Chain Disruptions: Ongoing supply chain challenges, including delays in delivery times, increased shipping costs, and shortages of raw materials, can impact production schedules and costs.
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Economic Uncertainty: Global economic conditions can affect customer demand for industrial products. A potential recession, inflationary pressures, or geopolitical tensions could lead to reduced spending in key markets.
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Technological Change: Rapid technological advancements require continuous investment in research and development to keep pace. Failure to innovate could result in a loss of competitive advantage.
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Regulatory Compliance: Changes in environmental regulations and labor laws can increase operational costs. Non-compliance could also result in fines and damage to the company’s reputation.
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Competition: The industrial sector is highly competitive, with numerous players vying for market share. Increased competition can lead to price wars and reduced margins.
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Labor Shortages: Attracting and retaining skilled labor is crucial for operational efficiency. A labor shortage could hamper production capabilities and increase labor costs.
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Currency Fluctuations: As a company that operates globally, Regal Rexnord is exposed to foreign exchange risks. Fluctuations in currency values can impact earnings and pricing strategies.
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Environmental Sustainability: Growing emphasis on sustainability could require Regal Rexnord to invest in cleaner technologies and processes, impacting capital expenditures and operational costs.
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Cybersecurity Threats: As the company increases its reliance on digital technologies, it becomes more vulnerable to cyberattacks, which could disrupt operations and result in financial losses.
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Customer Dependence: Reliance on a limited number of large customers for a significant portion of revenue can pose risks if those customers experience financial difficulties or shift their purchasing strategies.
Addressing these risks requires a proactive strategy, including robust risk management practices, diversification of suppliers and customers, investment in technology, and a commitment to sustainability and innovation.
Revenue & Expenses Breakdown
Regal Rexnord Corp
Balance Sheet Decomposition
Regal Rexnord Corp
Current Assets | 3B |
Cash & Short-Term Investments | 458.6m |
Receivables | 855.8m |
Other Current Assets | 1.6B |
Non-Current Assets | 11.6B |
PP&E | 1.1B |
Intangibles | 10.4B |
Other Non-Current Assets | 106.5m |
Current Liabilities | 1.2B |
Accounts Payable | 553.2m |
Accrued Liabilities | 623.7m |
Other Current Liabilities | 31.7m |
Non-Current Liabilities | 6.9B |
Long-Term Debt | 5.7B |
Other Non-Current Liabilities | 1.2B |
Earnings Waterfall
Regal Rexnord Corp
Revenue
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6.2B
USD
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Cost of Revenue
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-3.9B
USD
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Gross Profit
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2.3B
USD
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Operating Expenses
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-1.5B
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Operating Income
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736.1m
USD
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Other Expenses
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-525.2m
USD
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Net Income
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210.9m
USD
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Free Cash Flow Analysis
Regal Rexnord Corp
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Free Cash Flow | USD |
In the third quarter, Regal Rexnord recorded an impressive adjusted gross margin of 38.4% and an EBITDA margin of 22.8%, up 110 basis points from the previous year, despite a 2.7% decline in organic sales. The IPS segment, however, grew, driven by successful cross-sell initiatives, while PES faced challenges. Looking ahead, the revenue outlook has been revised downward due to weaker performance in the AMC and PES divisions, with expected adjusted EBITDA margin set at 22% for the year. Free cash flow guidance for 2024 is reduced to approximately $600 million, but the company remains optimistic about long-term growth potential.
What is Earnings Call?
RRX Profitability Score
Profitability Due Diligence
Regal Rexnord Corp's profitability score is 52/100. The higher the profitability score, the more profitable the company is.
Score
Regal Rexnord Corp's profitability score is 52/100. The higher the profitability score, the more profitable the company is.
RRX Solvency Score
Solvency Due Diligence
Regal Rexnord Corp's solvency score is 37/100. The higher the solvency score, the more solvent the company is.
Score
Regal Rexnord Corp's solvency score is 37/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
RRX Price Targets Summary
Regal Rexnord Corp
According to Wall Street analysts, the average 1-year price target for RRX is 206.72 USD with a low forecast of 191.9 USD and a high forecast of 231 USD.
Dividends
Current shareholder yield for RRX is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
RRX Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Regal Rexnord Corp. engages in the manufacture of electric motors, electrical motion controls, power generation, and power transmission products. The company is headquartered in Beloit, Wisconsin and currently employs 30,000 full-time employees. Its four operating segments are: Commercial Systems, Industrial Systems, Climate Solutions and Motion Control Solutions. Its Commercial Systems segment designs and produces primarily AC and DC motors from fractional to approximately 5 horsepower, electronic variable speed controls, fans and blowers for commercial applications. Its Industrial Systems segment produces Integral and AC motors from 1 to 12,000 horsepower for industrial applications, along with aftermarket parts and kits to support such products. Its Climate Solutions Segment produces fractional horsepower motors, electronic variable speed controls and blowers. Its Motion Control Solutions Segment solution designs mounted and unmounted industrial bearings to diverse end markets.
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IPO
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The intrinsic value of one RRX stock under the Base Case scenario is 172.11 USD.
Compared to the current market price of 181.17 USD, Regal Rexnord Corp is Overvalued by 5%.