How do Rexnord’s valuations compare?
Rexnord (RXN) has missed four consensus revenue estimates in the last 20 quarters. Its revenue has grown at a five-year CAGR (compound annual growth rate) of 1.2%. Its EPS has had a five-year CAGR of -17.9%.
The company has a price-to-sales ratio of 1.5x compared to the sector at 2.2x and the S&P 500 at 2.2x. The PE ratios of the sector and the S&P 500 are 37.5x and 22.1x, respectively. RXN has a dividend yield of 0% compared to the sector and the S&P 500 at 1.4% and 2.3%, respectively.
RXN stock has risen 14.4% year-to-date.
What contributed to the valuations?
In 2018, Rexnord has released its fiscal 2018 results and announced product launches and a divestiture.
- The company completed its acquisition of Centa Power Transmission in February. The acquisition is expected to drive revenue and cost synergies and provide multiple growth opportunities for the complementary product portfolio.
- Rexnord launched its 390 Series MatTop Chain in February for tight transfer conveyors for the beverage industry.
- It announced the Tollok TLK 136 in February, adding to its line of locking devices.
- It recorded net sales growth of 8% in fiscal 2018, driven by core sales, acquisitions, and foreign currency translation, offset by the exit of the Rodney Hunt-Fontaine product line. Its EPS grew 5% during the period.
- The company intends to divest its VAG operations by the first quarter of 2019. VAG operations catered to worldwide water and wastewater infrastructure end markets.
- It launched the 3000 series MCF Couplings in June to its line of power transmission mechanisms.
- The company announced the Dry-PT option for select MatTop & TableTop Chains in June, adding to its line of conveying solutions products.
The Horizons Nasdaq 100 Covered Call ETF (QYLD) offers a dividend yield of 9.5% at a PE ratio of 24.1x. It has 60% exposure to the technology sector. The ARK Industrial Innovation ETF (ARKQ) offers a dividend yield of 0.1% at a PE ratio of 27x. It has 50% exposure to the technology sector.