Zacks Investment Research upgraded Rexnord Corporation (RXN) to a Zacks Rank #1 (Strong Buy) on Aug 24, based on impressive first-quarter fiscal 2014 results and a strong outlook.
Why the Upgrade?
Rexnord reported strong results for the first quarter of fiscal 2014, with year-over-year hikes in earnings per share as well as revenues. Adjusted earnings per share came in at 24 cents, increasing by a cent year over year. Revenues reported were $508.7 million, 3.1% higher than the prior-year quarter.
The strong results came on the back of growth across all the business segments, especially the Water Management business.
Subsequent to the strong fiscal first-quarter results, management increased its core sales growth guidance from 1%–3% to 2%–4% for fiscal year 2014. The lower end of the earnings per share guidance was also raised from $1.10–$1.18 to $1.12–$1.18. Tax rate is expected to be within the 31%–33% range.
For the second quarter of fiscal 2014, sales are anticipated to be within $510 million–$520 million and adjusted earnings per share within the 23 cents–25 cents range. Tax rate is expected to be 35%.
Moreover, recently Rexnord announced its acquisition of the U.K.-based company, Micro Precision Gear Technology, for an undisclosed amount. The specialty precision gears manufactured by Micro Precision cater to the aerospace industry. The acquisition will widen Rexnord’s reach in the aerospace industry while leveraging Micro Precision’s goodwill.
Other Stocks to Consider
Besides Rexnord, other stocks in the industry having a favorable Zacks Rank are Fabrinet (FN), Plug Power Inc. (PLUG) and AO Smith Corp. (AOS). While Fabrinet carries a Zacks Rank #1 (Strong Buy), Plug Power and AO Smith carry a Zacks Rank #2 (Buy).
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