Rexnord Corporation is comprised of two strategic platforms, Process & Motion Control and Water Management. The Process & Motion Control platform designs, manufactures, markets and services specified, highly-engineered mechanical components used within complex systems. The Water Management platform designs, procures, manufactures and markets products that provide and enhance water quality, safety, flow control and conservation. The company was founded in 2006 and is based in Milwaukee, Wisconsin.
RXN Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Rexnord Corp. To summarize, we found that Rexnord Corp ranked in the 45th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. The most interesting components of our discounted cash flow analysis for Rexnord Corp ended up being:
The company has produced more trailing twelve month cash flow than 64.03% of its sector Industrials.
Rexnord Corp's weighted average cost of capital (WACC) is 7%; for context, that number is higher than merely 16.64% of tickers in our DCF set.
Rexnord Corp's effective tax rate, as measured by taxes paid relative to net income, is at 17 -- greater than 65.56% of US stocks with positive free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
AOS, KEX, RBA, BRC, and PH can be thought of as valuation peers to RXN, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.
Second quarter earnings were better than expected across the industrial space, but the reality remains that business conditions remain challenging. August industrial production was up from July and better than expected, but still down 0.4% year over year and signs of the hoped-for V-shaped recoveries are still intermittent at best....
Stephen Simpson, CFA on Seeking Alpha | September 14, 2020
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Rexnord Corporation and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
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