I liked Rexnord (NYSE:RXN) back in mid-December,
and I can't really complain with how the shares have performed since.
Not only is the return about 10 points above that of the S&P 500,
but Rexnord has done alright next to most of its process/motion control
peers like ABB (NYSE:ABB), Altra (NASDAQ:AIMC), Regal Beloit (NYSE:RBC), and SKF (OTCPK:SKFRY),
as well as peers in the water products sector. Better still,
short-cycle industrial activity is picking up (including in the
industrial MRO space) and process industries like mining seem to be past
the worst, while core food/beverage continues to perform well. Add in a
slowly improving institutional water market and some longer-term
strategic growth opportunities and it's a relatively solid backdrop.
Valuation
is no longer so compelling, but "meh" seems to be the new
"bargain-priced" in the industry sector and shaving just half a point
off of my 10% discount rate would give me a fair value slightly above
today's price. Provided that Rexnord can show some healthy signs in its
core revenue and margins later this week when it reports fiscal fourth
quarter earnings, not to mention constructive guidance in line with what
other industrial-leveraged companies have said, this could still be a
name with some room left to advance.
Continue here:
Rexnord Should Be Seeing A Turn Now
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