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Rexnord Trades as Zurn Water (ZWS) Post Regal Beloit Deal

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Zurn Water Solutions Corporation (ZWS - Free Report) started trading on the NYSE from Oct 5, 2021. This is the new legal name for Rexnord Corporation, which completed the spin-off of its Process & Motion Control (“PMC”) segment to Regal Beloit Corporation on Oct 4.

It is worth noting here that the deal between Rexnord and Regal Beloit was signed in February 2021. It called for the combination of Regal Beloit’s operations with Rexnord’s Process & Motion Control (“PMC”) segment. The transaction was valued at $3.69 billion.

Yesterday, Zurn Water’s shares gained 2.42%, ending the trading session at $33.85. Meanwhile, shares of Regal Rexnord Corporation (RRX - Free Report) — the new legal name of Regal Beloit Corporation — declined 1.40% to $138.13 yesterday. It also commenced trading on the NYSE on Oct 5.

Insight Into Related Events

Per the agreed terms, Rexnord distributed shares of Land Newco, Inc. to its shareholders in the form of a pro-rata dividend. Land Newco was the wholly-owned subsidiary of Rexnord and the owner of the PMC business. The record date of the pro-rata dividend was Sep 29, 2021, and the payment date was Oct 4. This process resulted in the spin-off of Land Newco.

Post this, Regal Beloit acquired Land Newco in a stock transaction (the exchange ratio being 0.2230). Land Newco became a wholly-owned subsidiary of Regal Beloit, with the completion of the stock transaction. Both Rexnord and Regal Beloit changed their respective legal names.

With the completion of the deal, Zurn Water’s shareholders own 38.6% of interest in Regal Rexnord.

Headquartered in Milwaukee, WI, Zurn Water engages in developing and manufacturing products that help in enhancing conservation, quality, safety and flow control of water. The products can be categorized into finish plumbing, water control & backflow, drainage & interceptors, fire protection, repair parts, and PEX. Services offered by the company include inSpec, manufacturer cross reference, plumbSMART and labor savings.

Zacks Rank, Price Performance and Earnings Estimates

Zurn Water currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have lost 32.5% compared with the industry’s decline of 5.5%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The Zacks Consensus Estimate for the company’s earnings is at $2.04 for 2021 and $2.37 for 2022, reflecting declines of 1.4% and 0.8% from the respective seven-day-ago figures. The consensus estimate for the third quarter of 2021 decreased 3.6% to 53 cents in the past seven days.

Stocks to Consider

Two better-ranked stocks in the industry are The LGL Group, Inc. (LGL - Free Report) and SPX FLOW, Inc. (FLOW - Free Report) . Both companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. In the past 60 days, earnings estimates for these companies have improved for the current year.