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Rexnord Reaches 52-Week High

Zacks Equity Research

Shares of Rexnord Corporation (RXN) reached a new 52-week high of $26.95 during its trading session on Dec 26. This is an increase over the previous high of $26.85 reached on Dec 24.  

Rexnord Corporation ended the trading day on Dec 26 at $26.69, reflecting a year-to-date return of 22.9%. The trading volume for the session was 0.81 million shares. Further upside potential exists for this Zacks Rank #2 (Buy) mechanical components manufacturer, reflected by its positive earnings estimate revisions in the last 60 days and expected earnings growth of 44.4% for fiscal 2014.

Growth Drivers

Shares of Rexnord Corporation have risen 18.9% since the company reported its financial results for the fiscal second quarter of 2014 (ended Sep 2013) on Oct 24, 2013. Top-line results were impressive and the year-over-year growth of 3% was driven by its diversified product portfolio, improving demands, and benefits from growth initiatives undertaken.

Earnings per share of 31 cents, was up 29% year over year and beat the Zacks Consensus Estimate of 26 cents. For fiscal 2014, Rexnord anticipates core sales to grow within the 3%–4% range and earnings per share to range within $1.32–$1.38, up from $1.12–$1.18 expected earlier.

Rexnord seems well positioned to grow its Process & Motion Control and Water Management platforms. This growth prospect is supported by the increasing backlog in the non-residential construction market of U.S. and Canada, growing demand for clean water and rising demand in the aerospace industry.

Also, acquisitions are expected to play a major role in expanding Rexnord’s businesses. Recently, the company acquired the assets of Precision Gear Holdings, LLC (PGH). The acquisition is likely to widen Rexnord’s product offerings within its Process and Motion Control platform.

Estimate Revisions Show Potency

Over the last 60 days, the Zacks Consensus Estimate for Rexnord Corporation has increased by 1.5% to $1.34 for fiscal 2014 and by 1.2% to $1.69 for fiscal 2015. Also, expected earnings growth rate for the next five years is 23.4%.

Rexnord Corporation currently has a market capitalization of $2.6 billion. Other favorably ranked stocks in the industry include EnerSys (ENS), Pioneer Power Solutions, Inc. (PPSI) and Xylem Inc. (XYL). All three hold a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on XYL
Read the Full Research Report on ENS
Read the Full Research Report on RXN
Read the Full Research Report on PPSI

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