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Regal Rexnord (RRX)
NYSE:RRX
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Regal Rexnord (RRX) AI Stock Analysis

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RRX

Regal Rexnord

(NYSE:RRX)

Rating:72Outperform
Price Target:
$151.00
▼(-2.23%Downside)
Regal Rexnord's overall stock score is driven by strong earnings call performance and technical analysis, indicating positive market momentum. While financial performance is stable, the high valuation and modest dividend yield present some concerns. The company's optimistic outlook in key growth areas, despite external challenges, supports a favorable score.
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 (RRX) vs. SPDR S&P 500 ETF (SPY)

Regal Rexnord Business Overview & Revenue Model

Company DescriptionRegal Rexnord Corporation is a diversified industrial company that operates in various sectors, including motion control, electrical systems, and automation solutions. The company specializes in manufacturing and supplying a comprehensive range of products such as electric motors, power transmission components, and other related industrial equipment. Regal Rexnord serves a global clientele across multiple industries, including manufacturing, commercial, and residential sectors.
How the Company Makes MoneyRegal Rexnord makes money primarily through the production and sale of its diverse range of industrial products and systems. The company's revenue streams are largely driven by its sales of electric motors, power transmission solutions, and automation products to industrial and commercial customers. It also generates income through service offerings such as maintenance and repair solutions. Key partnerships with distributors and direct sales to large industrial clients are significant factors contributing to its revenue. Regal Rexnord's focus on innovation and efficiency in its products helps maintain its competitive position in the market, contributing to its financial performance.

Regal Rexnord Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: 40.37%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive momentum in key markets and margin expansion, offset by uncertainties and challenges such as tariff impacts and weakness in certain segments and markets. Despite these challenges, the company remains optimistic about its growth prospects, particularly in automation and humanoid robot markets.
Q1-2025 Updates
Positive Updates
Strong Start to 2025
All segments outperformed targets set last quarter, with orders up 3.3% on a daily organic basis and a book-to-bill ratio of 1.07.
Sales Growth in Key Areas
Sales were up 0.7% on an organic basis, with notable strength in Resi HVAC, Aerospace, and Energy markets.
Margin Expansion Achieved
Adjusted gross margin was 37.9%, up 50 basis points versus the prior year, with adjusted EBITDA margin at 21.8%, up 30 basis points.
Earnings Growth
Adjusted earnings per share was $2.15, up 7.5% versus the prior year.
Cash Flow Improvement
Generated nearly $86 million of free cash flow, up 32% versus prior year.
Humanoid Robot Market Potential
Regal Rexnord is gaining momentum in the humanoid robot market, with recent wins worth over $20 million in sales annually.
Negative Updates
Tariff Uncertainty
Changes in U.S. trade policy have raised uncertainty, with a gross annualized unmitigated impact of $130 million from tariffs.
Weakness in Industrial Powertrain Solutions
Net sales down 3.4% versus prior year on an organic basis, with significant weakness in machinery/off-highway markets.
Decline in AMC Orders
AMC orders were down 3% versus prior year on a daily basis, with project lumpiness affecting results.
Challenges in Non-U.S. Markets
Weakness in China, Europe, and Rest of World affected IPS sales, which were only offset by growth in North America.
Company Guidance
During Regal Rexnord's Q1 2025 earnings call, the company reaffirmed its full-year guidance, highlighting several key metrics. The company reported an organic sales increase of 0.7% year-over-year, or 2.3% on a daily organic basis, with particular strength in the Residential HVAC, Aerospace, and Energy markets. Orders grew by 3.3% on a daily basis, with a book-to-bill ratio of 1.07. The adjusted gross margin improved by 50 basis points to 37.9%, and the adjusted EBITDA margin was 21.8%, a 30 basis point increase. Adjusted earnings per share rose 7.5% to $2.15, and the company generated $86 million in free cash flow, up 32% from the previous year. Regal Rexnord also addressed tariff impacts, stating that their mitigation plans aim to fully neutralize the effects on 2025 EBITDA and earnings, with a goal of being EBITDA margin neutral by mid-2026.

Regal Rexnord Financial Statement Overview

Summary
Regal Rexnord exhibits a stable financial position with solid profitability margins and efficient cash flow generation. Despite a slight revenue decline, the company maintains a strong equity base and effective leverage management. Continued focus on revenue growth and improving net profit margins could enhance future performance.
Income Statement
67
Positive
Regal Rexnord's income statement for the TTM shows a gross profit margin of 36.63%, which is a healthy level for the industry. The net profit margin stands at 3.96%, indicating profitability but with room for improvement. The EBIT margin of 10.89% and EBITDA margin of 20.09% reflect solid operational efficiency. However, the revenue growth rate compared to the previous year is negative 2.15%, indicating a slight decline in revenue.
Balance Sheet
72
Positive
The company's balance sheet highlights a debt-to-equity ratio of 0.85, suggesting a moderate level of leverage. The return on equity (ROE) is 3.64%, which points to modest efficiency in generating profits from shareholders' equity. An equity ratio of 45.76% indicates a strong equity base relative to total assets, providing a stable financial structure.
Cash Flow
75
Positive
Regal Rexnord's cash flow analysis reveals a positive free cash flow growth rate of 4.18%. The operating cash flow to net income ratio is 2.69, suggesting robust cash generation relative to net income. The free cash flow to net income ratio is 2.23, indicating strong free cash flow relative to net income, which is favorable for sustaining operations and funding growth.
BreakdownDec 2024Dec 2023Dec 2022Mar 2022Mar 2021
Income Statement
Total Revenue6.03B6.25B5.22B3.81B2.91B
Gross Profit2.19B2.11B1.67B1.09B808.70M
EBITDA630.00M971.00M1.04B573.00M447.20M
Net Income196.20M-57.40M488.90M229.60M187.70M
Balance Sheet
Total Assets14.03B15.43B10.27B10.28B4.59B
Cash, Cash Equivalents and Short-Term Investments393.50M574.00M688.50M672.80M611.30M
Total Debt5.61B6.55B2.02B1.92B1.07B
Total Liabilities7.77B9.07B3.85B3.93B2.01B
Stockholders Equity6.26B6.34B6.39B6.31B2.54B
Cash Flow
Free Cash Flow499.90M596.20M352.40M303.20M387.90M
Operating Cash Flow609.40M715.30M436.20M357.70M435.40M
Investing Cash Flow275.40M-4.98B-113.30M-175.70M-37.00M
Financing Cash Flow-1.10B4.20B-274.20M-117.60M-147.60M

Regal Rexnord Technical Analysis

Technical Analysis Sentiment
Positive
Last Price154.44
Price Trends
50DMA
143.24
Positive
100DMA
128.25
Positive
200DMA
144.22
Positive
Market Momentum
MACD
2.99
Positive
RSI
63.35
Neutral
STOCH
80.71
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RRX, the sentiment is Positive. The current price of 154.44 is above the 20-day moving average (MA) of 149.45, above the 50-day MA of 143.24, and above the 200-day MA of 144.22, indicating a bullish trend. The MACD of 2.99 indicates Positive momentum. The RSI at 63.35 is Neutral, neither overbought nor oversold. The STOCH value of 80.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RRX.

Regal Rexnord Risk Analysis

Regal Rexnord disclosed 36 risk factors in its most recent earnings report. Regal Rexnord reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Regal Rexnord Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$8.20B40.5915.24%10.78%30.05%
77
Outperform
$8.35B24.0624.58%1.93%3.26%-7.70%
74
Outperform
$7.16B25.6714.00%1.55%4.23%20.40%
72
Outperform
$8.00B18.6912.33%-2.56%11.51%
72
Outperform
$10.17B43.683.69%0.91%-10.19%
67
Neutral
£2.83B10.434.69%215.18%2.73%-20.52%
64
Neutral
$9.03B26.6314.29%8.07%58.67%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RRX
Regal Rexnord
154.44
4.99
3.34%
DCI
Donaldson Company
71.27
-0.67
-0.93%
FLS
Flowserve
54.36
5.16
10.49%
GNRC
Generac Holdings
153.39
0.61
0.40%
SPXC
SPX
175.41
29.68
20.37%
MIDD
The Middleby
148.46
16.85
12.80%

Regal Rexnord Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Regal Rexnord Appoints New Board Members for Strategic Growth
Positive
Feb 19, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 03, 2025