Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Rexnord Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Rexnord Corporation has a trailing twelve months PE ratio of 16.92, as you can see in the chart below:
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This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 20.77. Also, if we focus on the long-term PE trend, Rexnord Corporation’s current PE level puts it above its midpoint of 15.81 over the past five years.
The stock’s PE also compares favorably with the Industrial Products sector’s trailing twelve months PE ratio, which stands at 18.36. This indicates that the stock is undervalued right now, compared to its peers.
We should also point out Rexnord Corporation has a forward PE ratio (price relative to this year’s earnings) of 17.77, so it is fair to expect an increase in the share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Rexnord Corporation has a P/S ratio of just 2.01. This is noticeably lower than the S&P 500 average, which comes in at 3.71 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
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Broad Value Outlook
In aggregate, Rexnord Corporation currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Rexnord Corporation a solid choice for value investors and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio comes in at 11.48, which is somewhat better than the industry average of 14.09. Clearly, RXN is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Rexnord Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth as well as a Momentum Score of B. This gives RXN a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been upbeat. While the current year estimate has seen five upward and one downward movement, the full-year 2021 estimate has seen two upward and three downward movements over the past two months.
This has had a positive effect on the consensus estimate. While the current year consensus has climbed 1.54% over the past two months, the full-year 2021 estimate has increased 0.48%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite this favorable trend, the stock has a Zacks Rank #3 (Hold) and it is the reason why we are looking for inline performance from the company in the near term.
Bottom Line
Rexnord Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Besides a sluggish industry rank (among bottom 40% of more than 250 industries), with a Zacks Rank #3 it is hard to get too excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
.jpg)
Hence, value investors might want to wait for Zacks Rank, past industry performance, and industry rank to turn around in the name first, but once that happens, the stock is going to be a compelling pick.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Can Value Investors Consider Rexnord Corporation (RXN)?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Rexnord Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Rexnord Corporation has a trailing twelve months PE ratio of 16.92, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 20.77. Also, if we focus on the long-term PE trend, Rexnord Corporation’s current PE level puts it above its midpoint of 15.81 over the past five years.
The stock’s PE also compares favorably with the Industrial Products sector’s trailing twelve months PE ratio, which stands at 18.36. This indicates that the stock is undervalued right now, compared to its peers.
We should also point out Rexnord Corporation has a forward PE ratio (price relative to this year’s earnings) of 17.77, so it is fair to expect an increase in the share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Rexnord Corporation has a P/S ratio of just 2.01. This is noticeably lower than the S&P 500 average, which comes in at 3.71 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Rexnord Corporation currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Rexnord Corporation a solid choice for value investors and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio comes in at 11.48, which is somewhat better than the industry average of 14.09. Clearly, RXN is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Rexnord Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth as well as a Momentum Score of B. This gives RXN a Zacks VGM score — or its overarching fundamental grade — of B. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been upbeat. While the current year estimate has seen five upward and one downward movement, the full-year 2021 estimate has seen two upward and three downward movements over the past two months.
This has had a positive effect on the consensus estimate. While the current year consensus has climbed 1.54% over the past two months, the full-year 2021 estimate has increased 0.48%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Rexnord Corporation Price and Consensus
Rexnord Corporation price-consensus-chart | Rexnord Corporation Quote
Despite this favorable trend, the stock has a Zacks Rank #3 (Hold) and it is the reason why we are looking for inline performance from the company in the near term.
Bottom Line
Rexnord Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Besides a sluggish industry rank (among bottom 40% of more than 250 industries), with a Zacks Rank #3 it is hard to get too excited about the stock.
Also, over the past two years, the broader industry has clearly underperformed the market at large, as you can see below:
Hence, value investors might want to wait for Zacks Rank, past industry performance, and industry rank to turn around in the name first, but once that happens, the stock is going to be a compelling pick.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>