Regal Rexnord (RRX) AI Stock Analysis

• Market Cap: $7.83B
• Dividend Yield: 1.16%
• Average Volume (3M): 640.47K
• Price to Earnings (P/E): 40.1
• Beta (1Y): 1.29
• Revenue Growth: -3.47%
• EPS Growth: N/A
• Country: US
• Employees: 30,300
• Sector: Industrials
• Sector Strength: 70
• Industry: Industrial - Machinery
• EPS (TTM): 2.95
• Shares Outstanding: 66,330,770
• 10 Day Avg. Volume: 684,693
• 30 Day Avg. Volume: 640,472
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.33
• Price to Cash Flow (P/CF): 9.40
• P/FCF Ratio: 7.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $187.50
• Price Target Upside: 58.86% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

Regal Rexnord's stock score reflects a mix of solid financial performance and operational efficiency offset by challenging market conditions and high valuation. While the company has made strides in profitability and debt reduction, the stock is technically weak and appears overvalued. The recent board appointments and cautiously optimistic guidance provide some positive outlook, but risks remain due to market challenges and FX headwinds.

Positive Factors

Growth and Margins

The improved portfolio with an enhanced growth/margin profile indicates potential for outperformance regardless of the cyclical backdrop.

Market Recovery

There is a clearer path for the stock to work from here as estimates reacceleration with an end market recovery.

Order Growth

Daily order growth inflected positive for the first time since 2Q22, aided by easier comps.

Negative Factors

Revenue Pressure

RRX missed 3Q operationally and 2024 guidance was reset lower due to incremental revenue pressure.

Sales Growth Outlook

Management sees limited organic sales growth in 2025, with ongoing demand headwinds.

Regal Rexnord Business Overview & Revenue Model

Company Description

Regal Rexnord Corporation, together with its subsidiaries, designs, manufactures, and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide. It operates through four segments: Commercial Systems, Industrial Systems, Climate Solutions, and Motion Control Solutions. The Commercial Systems segment provides AC and DC motors, electronic variable speed controls, fans, blowers, and precision stator and rotor kits. The Industrial Systems segment offers AC motors for industrial applications; electric alternators for prime and standby power applications to data centers, distributed energy, microgrid, rental marine, agriculture, healthcare, mobile, and defense markets; and switchgear for healthcare, government, and waste water applications, as well as residential, commercial, and industrial applications. The Climate Solutions segment provides fractional motors, electronic variable speed controls, and blowers for use in a residential and light commercial air moving applications; and fractional horsepower motors and blowers for white goods, water heating equipment, small pumps, compressors, and fans. The Motion Control Solutions segment offers bearings; conveyors; disc, gear, grid, elastomeric, and torsionally soft couplings; mechanical power transmission drives and components; worm gearing, shaft configuration, helical, bevel, helical bevel, worm, hypoid, and spur gearing products; and aerospace components. This segment serves beverage, bulk handling, metal, special machinery, energy, and aerospace and general industrial markets. The company sells its products directly to original equipment manufacturers and end-users through a network of direct and independent sales representatives, and distributors. The company was formerly known as Regal Beloit Corporation. The company was founded in 1955 and is headquartered in Beloit, Wisconsin.

How the Company Makes Money

Regal Rexnord makes money primarily through the design, manufacture, and sale of a diverse range of industrial systems and components. Its revenue streams are largely segmented into Climate Solutions, Commercial Systems, Industrial Systems, and Motion Control Solutions, each contributing to the company's overall financial performance. These segments cater to a broad range of industries including HVAC, commercial refrigeration, industrial automation, and power transmission. The company generates revenue by providing high-efficiency electric motors, controls, power transmission products, and other engineered solutions. Regal Rexnord's financial success is driven by its ability to innovate and provide reliable, energy-efficient products that meet the evolving needs of its industrial clients, as well as through strategic partnerships and acquisitions that enhance its market reach and technological capabilities.

Regal Rexnord Financial Statement Overview

Summary

Regal Rexnord demonstrates solid profitability and operational efficiency, with improvements in net profit margins and ROE. The balance sheet is stable with a moderate leverage level, though reduced cash reserves could pose a risk. The cash flow statement reveals strong operational cash flow but highlights a need to control capital expenditures to maintain financial flexibility. Overall, the company is on a positive financial trajectory but should focus on enhancing revenue growth and cash reserves.

Income Statement

Regal Rexnord shows a robust gross profit margin of approximately 36.3% for the TTM period, indicating efficient cost management. The net profit margin has improved to around 3.25% from a negative position previously, showcasing a positive turnaround in profitability. However, the revenue has slightly decreased by 3.5% compared to the previous year, signaling a potential concern in top-line growth. The EBIT and EBITDA margins remain strong at 10.4% and 17.1% respectively, reflecting solid operational efficiency.

Balance Sheet

The debt-to-equity ratio stands at 0.90, indicating a moderate level of leverage. The return on equity (ROE) is positive at 3.13%, showing a recovery in profitability. The equity ratio is approximately 44.6%, implying a stable financial foundation with a significant portion of the assets financed by equity. However, the company has seen a reduction in cash reserves, which might limit financial flexibility.

Cash Flow

Operating cash flow is strong, with an adequate operating cash flow to net income ratio, reflecting good cash generation capability. However, free cash flow has decreased by 16.1% year-over-year, indicating pressure on cash reserves. The free cash flow to net income ratio is favorable, showing efficient cash flow conversion. Nonetheless, the company needs to monitor its capital expenditures closely.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Income Statement		Total Revenue
6.03B	6.25B	5.22B	3.81B	2.91B
	Gross Profit
2.19B	2.11B	1.67B	1.09B	808.70M
	EBIT
630.00M	601.70M	690.40M	332.40M	280.10M
	EBITDA
630.00M	971.00M	1.04B	573.00M	447.20M
	Net Income Common Stockholders
196.20M	-57.40M	488.90M	229.60M	187.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
393.50M	574.00M	688.50M	672.80M	611.30M
	Total Assets
14.03B	15.43B	10.27B	10.28B	4.59B
	Total Debt
5.61B	6.55B	2.02B	1.92B	1.07B
	Net Debt
5.21B	5.98B	1.33B	1.25B	460.10M
	Total Liabilities
7.77B	9.07B	3.85B	3.93B	2.01B
	Stockholders Equity
6.26B	6.34B	6.39B	6.31B	2.54B
Cash Flow		Free Cash Flow
499.90M	596.20M	352.40M	303.20M	387.90M
	Operating Cash Flow
609.40M	715.30M	436.20M	357.70M	435.40M
	Investing Cash Flow
275.40M	-4.98B	-113.30M	-175.70M	-37.00M
	Financing Cash Flow
-1.10B	4.20B	-274.20M	-117.60M	-147.60M

Regal Rexnord Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 118.03
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RRX, the sentiment is Negative. The current price of 118.03 is below the 20-day moving average (MA) of 120.80, below the 50-day MA of 136.50, and below the 200-day MA of 153.32, indicating a bearish trend. The MACD of -3.81 indicates Negative momentum. The RSI at 36.58 is Neutral, neither overbought nor oversold. The STOCH value of 43.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RRX.

Regal Rexnord Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOV	77 Outperform	$24.55B	9.37	24.30%	1.15%	-2.99%	159.26%
AME	76 Outperform	$39.32B	28.75	14.97%	0.64%	5.22%	4.46%
ETN	74 Outperform	$110.05B	30.06	20.23%	1.32%	7.25%	18.36%
ROK	69 Neutral	$30.31B	33.51	26.22%	1.91%	-11.28%	-23.69%
IR	62 Neutral	$32.02B	38.57	8.40%	0.10%	5.22%	8.01%
Sector *	62 Neutral	$8.05B	13.61	3.91%	3.08%	3.83%	-13.91%
RRX	56 Neutral	$7.83B	40.13	3.11%	1.16%	-3.47%	―

Regal Rexnord Corporate Events

Regal Rexnord Appoints New Board Members for Strategic Growth

On February 17, 2025, Regal Rexnord Corporation announced the appointment of Rashida A. Hodge from Microsoft and Gerben W. Bakker from Hubbell to its Board of Directors, with terms extending until the 2025 annual meeting of shareholders. This strategic move, coinciding with the retirement of long-serving director Anesa T. Chaibi, is seen as a step to bolster the company’s strategic direction and long-term success by integrating diverse expertise in technology, AI, and global manufacturing leadership.