Regal Rexnord (RRX): Assessing Valuation Following Q3 Results, Lowered Guidance, and CEO Succession News

Regal Rexnord (RRX) caught investor attention as the company reported higher third quarter profits and earnings per share. At the same time, management lowered full-year earnings guidance and announced an upcoming CEO transition.

See our latest analysis for Regal Rexnord.

Despite the boost in third quarter profits, Regal Rexnord’s share price momentum has faded, dropping more than 11% year-to-date and settling at $135.36. Mixed signals from lowered guidance and the upcoming CEO change have contributed to a cautious market mood. Over the past year, the total shareholder return is down 24%. However, long-term holders have seen gains of 9% over three years and 34% over five years. This suggests the company’s performance, while facing hurdles, still reflects underlying strength for patient investors.

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With shares trading well below analyst targets and recent earnings revealing both progress and new uncertainties, investors are left to consider whether Regal Rexnord is undervalued at these levels or if the market is already factoring in the next chapter of growth.

Most Popular Narrative: 23.8% Undervalued

With Regal Rexnord closing at $135.36, the most widely followed narrative places fair value near $177.73, creating a significant gap between market price and projected worth. This spread is driven by conviction in transformative growth and margin improvement, but it rests on several bold assumptions that set the stage for ongoing debate.

The accelerating adoption of energy-efficient and electrification solutions across industrial and commercial sectors continues to drive incremental demand for high-efficiency motors, subsystem solutions, and customized powertrain products. These are segments where Regal Rexnord is gaining traction, supported by regulatory tailwinds and sustainability initiatives. This positions the company for outsized revenue growth and improved pricing power over the medium and long term.

Read the complete narrative.

Curious about which financial forecasts are fueling this bullish valuation? The narrative’s projections hinge on aggressive future profit margins and revenue growth. These are numbers ambitious enough to catch any investor’s eye. Uncover the full breakdown driving the gap between market reality and analyst expectations.

Result: Fair Value of $177.73 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rare earth supply challenges or prolonged weakness in key markets could disrupt Regal Rexnord’s recovery and affect its long-term earnings trajectory.

Find out about the key risks to this Regal Rexnord narrative.

Build Your Own Regal Rexnord Narrative

If you’re inclined to challenge the consensus or want to chart your own path, you can easily create a narrative using your own analysis and latest insights, all in just a few minutes Do it your way

A great starting point for your Regal Rexnord research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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