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We issued an updated research report on machinery company Rexnord Corporation on May 22. The company designs, manufactures and sales process and motion control, and water management products.
Year to date, the company’s shares have yielded a return of 18.07%, outperforming the gain of 11.81% recorded by the Zacks categorized Machinery Electrical industry.
We believe that Rexnord’s diversified business operations in end-markets including mining, food & beverage, aerospace, non-residential construction and global water infrastructure have been beneficial over time. Also, the company resorts to both organic and inorganic growth activities to further improve its existing operations and penetrate the unexplored markets. In the long term, the company targets mid-single digit core growth, 30% incremental profit margin and free cash flow in excess of net income.
Rexnord’s financial performance has been impressive, with an average positive earnings surprise of 6.73% for the last four quarters. In the recently reported fourth-quarter fiscal 2017 (ended Mar 2017) results, its earnings and sales surpassed their Zacks Consensus Estimate by 6.1% and 1.8%, respectively. For fiscal 2018, the company anticipates benefiting from innovation of new products, cost-control measures and strengthening consumer driven end markets. Core sales growth will likely be in low single-digit in the fiscal year.
Also, the company is on track to complete its supply-chain optimization and footprint-repositioning programs in first-quarter fiscal 2018, realizing annualized cost-savings of $30 million. The program was launched in first-half fiscal 2016. As a result of this program, the company reduced its manufacturing footprint by roughly 20%.
Despite these positives, Rexnord is exposed to risks arising from unfavorable currency fluctuations, extensive industry rivalry and uncertain economic conditions. In fiscal 2017, adverse foreign currency movements lowered revenues by 1% from the year-ago period. We believe that further strengthening of the U.S. dollar will make the company’s products expensive in international markets and hence might impact their demand.
Zacks Rank & Key Picks
With a market capitalization of $2.4 billion, Rexnord presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Kennametal Inc. (KMT - Free Report) , Eaton Corporation, PLC (ETN - Free Report) and Regal Beloit Corporation (RBC - Free Report) . While Kennametal sports a Zacks Rank #1 (Strong Buy), both Eaton Corporation and Regal Beloit Corporation carry a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Kennametal’s earnings estimates for fiscal 2017 and fiscal 2018 were revised upward in the last 60 days. Also, the company’s average earnings surprise for the last four quarters was a positive 6.24%.
Eaton Corporation pulled off an average positive earnings surprise of 3.26% for the last four quarters. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.
Regal Beloit Corporation’s earnings estimates for 2017 and 2018 improved over the last 60 days. Also, it delivered an average positive earnings surprise of 1.48%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Rexnord's Q4 & View Impressive, Near-Term Risks Prevail
We issued an updated research report on machinery company Rexnord Corporation on May 22. The company designs, manufactures and sales process and motion control, and water management products.
Year to date, the company’s shares have yielded a return of 18.07%, outperforming the gain of 11.81% recorded by the Zacks categorized Machinery Electrical industry.
We believe that Rexnord’s diversified business operations in end-markets including mining, food & beverage, aerospace, non-residential construction and global water infrastructure have been beneficial over time. Also, the company resorts to both organic and inorganic growth activities to further improve its existing operations and penetrate the unexplored markets. In the long term, the company targets mid-single digit core growth, 30% incremental profit margin and free cash flow in excess of net income.
Rexnord’s financial performance has been impressive, with an average positive earnings surprise of 6.73% for the last four quarters. In the recently reported fourth-quarter fiscal 2017 (ended Mar 2017) results, its earnings and sales surpassed their Zacks Consensus Estimate by 6.1% and 1.8%, respectively. For fiscal 2018, the company anticipates benefiting from innovation of new products, cost-control measures and strengthening consumer driven end markets. Core sales growth will likely be in low single-digit in the fiscal year.
Also, the company is on track to complete its supply-chain optimization and footprint-repositioning programs in first-quarter fiscal 2018, realizing annualized cost-savings of $30 million. The program was launched in first-half fiscal 2016. As a result of this program, the company reduced its manufacturing footprint by roughly 20%.
Despite these positives, Rexnord is exposed to risks arising from unfavorable currency fluctuations, extensive industry rivalry and uncertain economic conditions. In fiscal 2017, adverse foreign currency movements lowered revenues by 1% from the year-ago period. We believe that further strengthening of the U.S. dollar will make the company’s products expensive in international markets and hence might impact their demand.
Zacks Rank & Key Picks
With a market capitalization of $2.4 billion, Rexnord presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Kennametal Inc. (KMT - Free Report) , Eaton Corporation, PLC (ETN - Free Report) and Regal Beloit Corporation (RBC - Free Report) . While Kennametal sports a Zacks Rank #1 (Strong Buy), both Eaton Corporation and Regal Beloit Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kennametal’s earnings estimates for fiscal 2017 and fiscal 2018 were revised upward in the last 60 days. Also, the company’s average earnings surprise for the last four quarters was a positive 6.24%.
Eaton Corporation pulled off an average positive earnings surprise of 3.26% for the last four quarters. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.
Regal Beloit Corporation’s earnings estimates for 2017 and 2018 improved over the last 60 days. Also, it delivered an average positive earnings surprise of 1.48%.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>