Regal Rexnord Corp (NYSE: RRX)

Sector: Industrials Industry: Specialty Industrial Machinery CIK: 0000082811
Market Cap 9.59 Bn
P/B 4.81
P/E 317.46
P/S 2.77
ROIC (Qtr) 4.82
Div Yield % 0.57
Rev 1y % (Qtr) 1.33
Total Debt (Qtr) 4.93 Bn
Debt/Equity (Qtr) 0.73
Add ratio to table...

About

Regal Rexnord Corporation (RRX) is a global leader in the engineering and manufacturing of factory automation sub-systems, industrial powertrain solutions, automation and mechanical power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems. The company operates in four main segments: Industrial Powertrain Solutions, Power Efficiency Solutions, Automation & Motion Control, and Industrial Systems. With a strong brand reputation, high-quality products, and global manufacturing...

Read more

Investment thesis

Bull case

  • Healthy cash reserves of 400M provide 9.30x coverage of short-term debt 43M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.04B provides exceptional 575.67x coverage of minority interest expenses 1.80M, showing strong core operations.
  • Robust free cash flow of 955.40M exceeds capital expenditure of 80.80M by 11.82x, indicating strong organic growth funding capability.
  • Operating cash flow of 1.04B provides strong 28.01x coverage of stock compensation 37M, indicating sustainable incentive practices.
  • Strong free cash flow of 955.40M provides 116.51x coverage of acquisition spending 8.20M, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 1.04B barely covers its investment activities of (72.60M), with a coverage ratio of -14.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 400M against inventory of 1.37B, the 0.29 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 1.04B provides thin coverage of dividend payments of (92.80M) with a -11.17 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 659.80M show weak coverage of depreciation charges of 549.20M, with a 1.20 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 549.20M relative to operating cash flow of 1.04B, which is 0.53x suggests significant maintenance capital requirements affecting free cash flow.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Industrial Machinery
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GEV GE Vernova Inc. 224.93 Bn 194.57 6.14 0.00 Bn
2 ETN Eaton Corp plc 153.13 Bn 38.99 5.75 11.22 Bn
3 PH Parker-Hannifin Corp 135.87 Bn 165.29 12.09 9.87 Bn
4 EMR Emerson Electric Co 111.68 Bn 47.10 4.65 13.41 Bn
5 ITW Illinois Tool Works Inc 86.68 Bn 28.27 5.40 8.97 Bn
6 CMI Cummins Inc 82.13 Bn 28.89 2.44 7.55 Bn
7 AME Ametek Inc/ 53.79 Bn 36.34 7.27 2.28 Bn
8 ROK Rockwell Automation, Inc 43.80 Bn 44.24 5.11 3.68 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.81 2.28
EV to Cash from Ops. EV/CFO 39.17 37.14
EV to Debt EV to Debt 2.29 34.39
EV to EBIT EV/EBIT 85.71 27.71
EV to EBITDA EV/EBITDA 40.42 25.34
EV to Free Cash Flow [EV/FCF] EV/FCF 50.92 133.36
EV to Market Cap EV to Market Cap 1.18 1.04
EV to Revenue EV/Rev 3.27 39.88
Price to Book Value [P/B] P/B 4.81 6.22
Price to Earnings [P/E] P/E 317.46 143.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.77 2.57
Dividend Payout Ratio % Div Payout % (Qtr) 36.10 15.73
Dividend per Basic Share Div per Share (Qtr) 1.40 0.91
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 9.73 82.53
Interest Coverage Int. cover (Qtr) 1.85 12.34
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 26.08 -45.99
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -12.78 118.48
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 10.01
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.91 -283.03
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -2.09 -36.87
EBIT Growth (1y) % EBIT 1y % (Qtr) -5.02 -80.72
EBT Growth (1y) % EBT 1y % (Qtr) 7.38 -120.93
EPS Growth (1y) % EPS 1y % (Qtr) 22.40 -39.22
FCF Growth (1y) % FCF 1y % (Qtr) 95.70 85.55
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.86 0.87
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.42 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.10
Cash Ratio Cash Ratio (Qtr) 0.32 3.01
Current Ratio Curr Ratio (Qtr) 2.05 4.97
Debt to Equity Ratio Debt/Equity (Qtr) 0.73 0.38
Interest Cover Ratio Int Coverage (Qtr) 1.85 12.34
Times Interest Earned Times Interest Earned (Qtr) 1.85 12.34
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.60 -7,291.27
EBIT Margin % EBIT Margin % (Qtr) 11.24 -7,413.30
EBT Margin % EBT Margin % (Qtr) 5.15 -9,015.79
Gross Margin % Gross Margin % (Qtr) 36.70 -32.61
Net Profit Margin % Net Margin % (Qtr) 4.40 -7,962.06