Rexnord (RXN:NYS) Fundamental Valuation Report



Fundamental Valuation Report

Rexnord(RXN:NYS)

Industrials:Diversified Industrials

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$27.24 (USD) 20/05/2019

Weighted Valuation
$30.00 (USD)

Overall Rating
Undervalued by 10.1%

Valuation Models Analyst Consensus: $31.50 (USD)
(in order of importance) Discounted Cash Flow: $27.55 (USD)
Comparables: $30.40 (USD)
Valuation Methods This company is:
Cash Flow: Fairly valued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (RXN:NYS USD)

Price 27.24
Range 27.17 – 27.47
52 week 21.70 – 31.86
Open 27.33
Vol / Avg. 499869/675520
Mkt cap 2.96B
P/E 17.89
Div/yield 0.00/0.00
EPS 0.10
Shares 104.87M
Beta 1.56

Company Description

Rexnord Corp is a U.S. based company that primarily operates through two segments. Its Process and motion control segment designs, manufactures, and distributes specified mechanical components that are used in complex systems, as well as providing related services. This segment’s customers come from food and beverage, aerospace, mining, energy and power generation, and other industries. The water management segment manufactures and markets products that can help enhance water quality and conservation. This segment’s target customers primarily include nonresidential buildings and water and wastewater treatment infrastructures. The company generates most of its revenue from American and European markets.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for RXN:NYS

Using a discounted cash flow model we generated an intrinsic value of $27.55 (USD) for RXN:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

RXN:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $27.55 1% 5% 1% 5%
WACC (or Ke) 11.19 $33.82 $22.65
Terminal Growth Rate 3.00 $23.35 $32.93
Tax Rate 0.22 $30.43 $24.67
Cash Flow 539,721,799 $25.33 $29.77
Capital Expenditures 4,140,000 $27.57 $27.54
Long Term Debt 1,822,700,000 $28.42 $26.68

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $30.40 (USD) for RXN:NYS. We also generated a valuation of $46.57 (USD) using other metrics and comparables.
The comparable companies were CSW Industrials (CSWI:NAS), Hillenbrand (HI:NYS), Watts Water Technologies (WTS:NYS), Altra Industrial Motion (AIMC:NAS) and Raven Industries (RAVN:NAS).

Company RXN:NYS End Date Value
Earnings/Share $0.10 (USD)
Book Value/Share $11.26 (USD)
Sales/Share $21.04 (USD)
Cash Flow/Share $2.36 (USD)
EBITDA/Share $3.32 (USD)
Price Based on Comps Adjustment Factor (%)
$2.72 (USD) 0.0
$42.25 (USD) 7.2
$45.83 (USD) -24.4
$26.98 (USD) -21.1
$50.29 (USD) -0.3
RXN:NYS Ratios Used Average Values CSWI:NAS HI:NYS WTS:NYS AIMC:NAS RAVN:NAS
65.00 PE Ratio 27.17 21.80 31.40 22.95 32.32 27.40
2.54 PB Ratio 3.75 3.56 3.66 3.27 0.00 4.53
1.36 PS Ratio 2.18 2.74 1.54 1.88 1.25 3.49
12.12 PCF Ratio 15.69 17.30 10.66 17.33 11.64 21.50
9.85 EV to EBITDA 15.13 12.84 13.22 12.77 17.84 18.97

Multiples

Using a multiples approach we generated a valuation of  $26.25 (USD) for RXN:NYS

Company RXN:NYS End Date Value
Earnings/Share $0.10 (USD)
Book Value/Share $11.26 (USD)
Sales/Share $21.04 (USD)
Cash Flow/Share $2.36 (USD)
EBITDA/Share $3.32 (USD)
Price Based on Comps Adjustment Factor
$3.23 (USD) 0
$33.13 (USD) 0
$26.52 (USD) 0
$26.71 (USD) 0
$41.64 (USD) 0
Ratios Ratio Average
PE Ratio 32.29
PB Ratio 2.94
PS Ratio 1.26
PCF Ratio 11.32
EV to EBITDA 12.52

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  RXN:NYS for the last 6 years was  2.93

We ran the Adjusted Book Value for  RXN:NYS and generated a book value of  $11.72 (USD)
By multiplying these we get an adjusted valuation of  $34.38 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for RXN:NYS. The 2 analysts have a concensus valuation for RXN:NYS for 2020 of $31.50 (USD).

RXN:NYS Rexnord

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 1 0 4.3333 Outperform 2019-5-17

Current Price: 27.24 USD

Analyst Consensus
USD Millions 2020 2021
Mean EPS 1.85 2.14
# EPS Analysts 3 3
Mean Revenue 2,110.40 2,189.40
# Revenue Analysts 2 2
Mean Target Price 31.50
Mean Cash Flow 2.45 2.62
Mean EBITDA 473.10 504.70
Mean Net Income 233.90 252.00
Mean Debt Outstanding 746.60 521.50
Mean Tax Rate 26.00 26.00
Mean Growth Rate 12.00
Mean Capital Expenditure 50.30 49.20

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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