Regal Rexnord shares hold steady target and Overweight rating By Investing.com

On Monday, KeyBanc maintained its positive stance on shares of Regal Rexnord (NYSE:) Corp (NYSE:RRX), reiterating an Overweight rating and a price target of $190.00. The affirmation comes as the industrial company prepares for its investor day on September 17, 2024. The financial institution anticipates that the event will act as a favorable trigger for Regal Rexnord’s stock, highlighting the company’s significantly restructured portfolio and its potential for long-term earnings per share (EPS) growth.

Despite challenges in the end markets, KeyBanc is optimistic about the company’s future. The analyst believes that the investor day will showcase Regal Rexnord’s transformation, achieved through both organic growth and strategic acquisitions. This transformation is expected to position the company for an attractive long-term EPS growth trajectory.

Regal Rexnord’s investor day is anticipated to provide insights into the company’s strategy and operational progress. KeyBanc suggests that this event will allow investors to gain a deeper understanding of the value inherent in Regal Rexnord’s enhanced portfolio. The firm’s analysis indicates that as the market recognizes the company’s growth and deleveraging path, there could be an upward re-rating of the stock.

The financial firm’s outlook on Regal Rexnord remains confident. KeyBanc anticipates that following the investor day, the market will better appreciate the company’s long-term EPS potential and its trajectory towards reducing leverage. This improved perception is expected to contribute to a higher valuation of Regal Rexnord shares in the future.

Regal Rexnord’s upcoming investor day is thus seen as a pivotal moment that could influence investor sentiment and further solidify the company’s market position. The current Overweight rating and $190.00 price target by KeyBanc reflect a belief in the company’s continued growth and financial health.

In other recent news, Regal Rexnord Corporation reported robust second-quarter results, achieving a record adjusted gross margin of 38.1%. Despite a 7% decrease in organic sales excluding Industrial Systems, the company experienced positive order growth in July.

This suggests a potential upturn in the second half of the year. Regal Rexnord’s Power Systems business has been performing well, particularly in the data center market. The Power Efficiency Solutions (PES) segment, however, saw a dip in organic sales but anticipates improved margins in the future.

The company also showcased financial prudence by paying down $481 million in debt, with plans to pay down an additional $900 million in 2024. Looking ahead, Regal Rexnord is expecting positive top-line growth in the second half of the year and into 2025, driven largely by anticipated low-single digit growth in residential orders. The company plans to present its growth strategy at an Investor Day on September 17.

These recent developments reflect a promising outlook for Regal Rexnord, as indicated by analysts.

InvestingPro Insights

As Regal Rexnord Corp (NYSE:RRX) approaches its investor day with optimism from KeyBanc, InvestingPro data provides a real-time perspective on the company’s financial health. With a market capitalization of $10.04 billion and a recent price close at $149, the company’s financial metrics are a mixed bag.

The price-to-book ratio stands at a stable 1.59, indicating that the stock might be reasonably valued in terms of its net asset value. The gross profit margin, at 35.78%, suggests that Regal Rexnord has been effective in managing its cost of goods sold and maintaining profitability on that front. Moreover, the company has achieved a revenue growth of 14.21% over the last twelve months as of Q2 2024, reflecting its ability to increase sales.

InvestingPro Tips highlight that despite a challenging week for the stock with an 11.21% price total return decrease, Regal Rexnord has maintained dividend payments for 52 consecutive years, which could be a sign of stability and a commitment to returning value to shareholders.

Moreover, while the company was not profitable over the last twelve months, analysts predict profitability this year, suggesting a potential turnaround in financial performance. For investors looking for more detailed analysis, there are over 7 additional InvestingPro Tips available, which could offer further insights into Regal Rexnord’s financial outlook and stock potential.

The upcoming investor day may indeed be a significant event for Regal Rexnord, and with these InvestingPro insights, investors can have a more comprehensive view of the company’s financial landscape as they assess its long-term growth prospects.

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