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Shares of Rexnord Corporation (RXN - Analyst Report) reached a new 52-week high of $29.73 during the trading session on Feb 24. The new 52-week high reflects an increase over $29.39 reached on Feb 18.

Rexnord Corporation closed the trading on Feb 24 at $29.14, reflecting a solid year-to-date return of 43.9%. The trading volume for the session was 0.46 million shares. The company is a mechanical components manufacturer and currently carries a Zacks Rank #4 (Sell). We believe its strong fundamentals along with solid earnings growth expected for 2014 and 2015 warrant further upside potential for Rexnord.
Growth Drivers

Rexnord Corporation reported impressive third-quarter fiscal 2014 (ended Dec 28, 2013) results on Jan 28. Shares, since then, have risen 6.3%. A brief snapshot of the company’s results has been provided below.

Earnings per share, adjusted for one-time items, were 34 cents in the quarter, above 19 cents earned in the year-ago quarter and the Zacks Consensus Estimate of 32 cents. Net sales generated were $489.1 million, up 3.7% year over year, primarily on the back of healthy organic sales growth at the Water Management segment.

For fiscal year 2014, Rexnord raised its earnings per share guidance to a range of $1.35–$1.39 from the earlier-expected range of $1.32–$1.38. The revision came on the heels of a solid third-quarter performance and the completion of the acquisition of Precision Gear Holdings.

In conjunction with the earnings release, Rexnord offered 3 million common shares to the public at $25.75 per share. The offering closed on Feb 5. Net proceeds derived from the offering will be utilized for general corporate purposes.

Impressive fiscal third-quarter 2014 results and an improved earnings guidance backed by a positive average earnings surprise of 15.2% have led to expectations of better performances in the quarters ahead.

Earnings Growth Rates Show Potency

The Zacks Consensus Estimate for Rexnord Corporation is at $1.29 for fiscal 2014 and at $1.70 for fiscal 2015, reflecting year-over-year growth of 38.7% and 31.8% respectively. Also, earnings in the next five years are expected to grow 22.7%, much above the 13.8% expected for the industry.

Rexnord Corporation currently has a $2.9 billion market capitalization. Some better-ranked stocks in the diversified machinery industry include EnerSys (ENS - Snapshot Report), Lennox International, Inc. (LII - Snapshot Report) and Actuant Corporation (ATU - Analyst Report), all of which hold a Zacks Rank #2 (Buy).

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