Critical Review: Regal Rexnord (RRX) versus Its Rivals

Regal Rexnord (NYSE:RRX) is one of 25 public companies in the “General industrial machinery,” industry, but how does it contrast to its peers? We will compare Regal Rexnord to similar businesses based on the strength of its earnings, dividends, analyst recommendations, valuation, risk, institutional ownership and profitability.

Profitability

This table compares Regal Rexnord and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Regal Rexnord	-0.48%	9.42%	3.86%
Regal Rexnord Competitors	-284.56%	-485.82%	-30.04%

Volatility & Risk

Regal Rexnord has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500. Comparatively, Regal Rexnord’s peers have a beta of 1.29, meaning that their average stock price is 29% more volatile than the S&P 500.

Earnings & Valuation

This table compares Regal Rexnord and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Regal Rexnord	$6.25 billion	-$57.40 million	-311.92
Regal Rexnord Competitors	$1.04 billion	-$10.65 million	-26.56

Regal Rexnord has higher revenue, but lower earnings than its peers. Regal Rexnord is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

99.7% of Regal Rexnord shares are owned by institutional investors. Comparatively, 47.1% of shares of all “General industrial machinery,” companies are owned by institutional investors. 0.8% of Regal Rexnord shares are owned by insiders. Comparatively, 11.1% of shares of all “General industrial machinery,” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Regal Rexnord pays an annual dividend of $1.40 per share and has a dividend yield of 0.9%. Regal Rexnord pays out -291.7% of its earnings in the form of a dividend. As a group, “General industrial machinery,” companies pay a dividend yield of 0.9% and pay out 34.5% of their earnings in the form of a dividend. Regal Rexnord has increased its dividend for 19 consecutive years. Regal Rexnord is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and price targets for Regal Rexnord and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Regal Rexnord	0	0	5	0	3.00
Regal Rexnord Competitors	95	264	377	8	2.40

Regal Rexnord currently has a consensus target price of $195.60, indicating a potential upside of 30.64%. As a group, “General industrial machinery,” companies have a potential upside of 17.19%. Given Regal Rexnord’s stronger consensus rating and higher probable upside, equities analysts plainly believe Regal Rexnord is more favorable than its peers.

Summary

Regal Rexnord beats its peers on 10 of the 14 factors compared.

About Regal Rexnord

Regal Rexnord Corporation manufactures and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide. The Industrial Powertrain Solutions segment provides mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes, gear motors, clutches, brakes, special, and industrial powertrain components and solutions for food and beverage, bulk material handling, eCommerce/warehouse distribution, energy, mining, marine, agricultural machinery, turf and garden, and general industrial markets. The Power Efficiency Solutions segment offers AC and DC motors, electronic variable speed controls, and blowers for residential, commercial HVAC, water heaters, commercial refrigeration, commercial building ventilation, pool and spa, irrigation, agriculture, conveying, and general commercial equipment markets. The Automation and Motion Control segment provides conveyor products, conveying automation subsystems, aerospace components, rotary precision motion solutions, high-efficiency miniature motors, motion controls, automation transfer switches, and switchgear for industrial applications and automation systems for material handling, aerospace and defense, factory automation, data centers, medical device, packaging, printing, semiconductor, robotic, industrial power tool, mobile off-highway, food and beverage processing, and other applications. The Industrial Systems segment offers integral motors, alternators, and aftermarket parts and kits for agriculture, marine, mining, oil and gas, food and beverage, data centers, prime and standby power, and general industrial equipment markets. It sells its products directly to original equipment manufacturers, distributors, and end-users. The company was formerly known as Regal Beloit Corporation. The company was founded in 1955 and is based in Milwaukee, Wisconsin.