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1. Company Snapshot

1.a. Company Description

Regal Rexnord Corporation, together with its subsidiaries, designs, manufactures, and sells industrial powertrain solutions, power transmission components, electric motors and electronic controls, air moving products, and specialty electrical components and systems worldwide.It operates through four segments: Commercial Systems, Industrial Systems, Climate Solutions, and Motion Control Solutions.The Commercial Systems segment provides AC and DC motors, electronic variable speed controls, fans, blowers, and precision stator and rotor kits.


The Industrial Systems segment offers AC motors for industrial applications; electric alternators for prime and standby power applications to data centers, distributed energy, microgrid, rental marine, agriculture, healthcare, mobile, and defense markets; and switchgear for healthcare, government, and waste water applications, as well as residential, commercial, and industrial applications.The Climate Solutions segment provides fractional motors, electronic variable speed controls, and blowers for use in a residential and light commercial air moving applications; and fractional horsepower motors and blowers for white goods, water heating equipment, small pumps, compressors, and fans.The Motion Control Solutions segment offers bearings; conveyors; disc, gear, grid, elastomeric, and torsionally soft couplings; mechanical power transmission drives and components; worm gearing, shaft configuration, helical, bevel, helical bevel, worm, hypoid, and spur gearing products; and aerospace components.


This segment serves beverage, bulk handling, metal, special machinery, energy, and aerospace and general industrial markets.The company sells its products directly to original equipment manufacturers and end-users through a network of direct and independent sales representatives, and distributors.The company was formerly known as Regal Beloit Corporation.


The company was founded in 1955 and is headquartered in Beloit, Wisconsin.

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1.b. Last Insights on RRX

Regal Rexnord Corporation faced negative drivers, including a decrease in holdings by institutional investors, such as Campbell & CO Investment Adviser LLC, which sold 77.3% of its shares. The company's Q3 earnings also lagged estimates, with a quarterly earnings per share of $2.51, missing the Zacks Consensus Estimate of $2.56. Despite a 1.3% increase in sales, the company's diluted EPS grew only 0.8% versus the prior year. Additionally, Ethic Inc. decreased its holdings in Regal Rexnord by 63.7% in the second quarter.

1.c. Company Highlights

2. Regal Rexnord's Q3 2025 Earnings: A Mixed Bag

Regal Rexnord reported a solid third-quarter performance, with sales up 2% and orders up 10% year-over-year. The company's adjusted gross margin was 37.6%, down 80 basis points, and adjusted EBITDA margin was 22.7%, roughly flat versus the prior year. Adjusted earnings per share for the quarter was $2.51, slightly below estimates of $2.56. The company generated $174 million of free cash flow, used to pay down debt, and ended the quarter with no variable rate debt.

Publication Date: Nov -02

📋 Highlights
  • Strong Q3 Performance: Sales up 2%, orders up 10%, with $174M free cash flow and no variable rate debt.
  • Data Center Momentum: Booked $135M in orders, $1B bid pipeline, and $195M in recent wins, expected to drive 1-1.5% growth in 2026.
  • Margin Pressures: Adjusted gross margin down 80 bps to 37.6%, EBITDA margin flat at 22.7%, with EPS guidance reduced to $9.50–$9.80.
  • Tariff & Supply Chain Headwinds: Rare earth magnet and tariff impacts to persist through 2026, with cost neutrality expected by mid-2026.

Segment-wise Performance

The company's orders in the quarter were up 9.8% versus the prior year, with a book-to-bill of 1.05, and backlog up 6% versus the prior year. Notably, the company booked $135 million of data center orders and an additional $16 million order in October. The data center market is a growing area for Regal Rexnord, with a $1 billion bid pipeline and $195 million in recent wins.

Guidance and Outlook

For the outlook, Regal Rexnord narrowed and lowered its adjusted EPS guidance to $9.50 to $9.80, or $9.65 at the midpoint, with sales guidance rising modestly. The company expects rare earth magnet constraints and tariffs to impact results, with headwinds expected to persist through year-end and into early 2026. For 2026, the company expects sales growth at a low to mid-single-digit rate, with data center business growing significantly.

Valuation and Metrics

Regal Rexnord's current valuation metrics indicate a P/E Ratio of 36.36, EV/EBITDA of 11.82, and a Free Cash Flow Yield of 10.01%. With the company's expected growth in data center business and plans to expand capacity, these metrics suggest that the market is pricing in a significant growth premium. The Net Debt / EBITDA ratio stands at 3.86, indicating a relatively high level of debt, but the company expects to reduce this to 2.5x by the end of 2026.

CEO Succession and Future Plans

CEO Louis Pinkham announced his succession plan, with the Board identifying a new leader to guide Regal Rexnord through its next growth phase. The company has a strong team and is focused on executing profitable growth initiatives, with a new facility for data center products expected to start production in Q1 and ship in Q2. The investments are CapEx-light, focusing on assembly and testing, and are expected to be accretive for Regal.

3. NewsRoom

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Regal Rexnord Corporation (NYSE:RRX) Given Consensus Rating of “Moderate Buy” by Brokerages

Nov -22

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Regal Rexnord Corporation $RRX Shares Sold by Campbell & CO Investment Adviser LLC

Nov -17

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Regal Rexnord Corporation (RRX) Presents at Baird 55th Annual Global Industrial Conference Transcript

Nov -12

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Regal Rexnord To Present At The Baird Global Industrial Conference

Nov -11

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Ethic Inc. Decreases Holdings in Regal Rexnord Corporation $RRX

Nov -01

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Regal Rexnord Corporation (RRX) Q3 2025 Earnings Call Transcript

Oct -30

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Regal Rexnord (RRX) Reports Q3 Earnings: What Key Metrics Have to Say

Oct -29

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Regal Rexnord (RRX) Q3 Earnings Lag Estimates

Oct -29

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.82%)

6. Segments

Industrial Powertrain Solutions

Expected Growth: 3%

Regal Rexnord's Industrial Powertrain Solutions segment growth is driven by increasing demand for energy-efficient and sustainable solutions, expansion in emerging markets, and strategic acquisitions. Additionally, the trend towards electrification and automation in industries such as material handling, HVAC, and power generation also contributes to the segment's growth.

Power Efficiency Solutions

Expected Growth: 5%

Regal Rexnord's Power Efficiency Solutions segment growth is driven by increasing demand for energy-efficient solutions, rising adoption of Industry 4.0 technologies, and growing need for reliable power transmission in industrial automation. Additionally, the company's strategic acquisitions and investments in digitalization and electrification are expected to fuel growth.

Automation & Motion Control

Expected Growth: 4%

Regal Rexnord's Automation & Motion Control segment growth is driven by increasing demand for industrial automation, rising adoption of IoT and Industry 4.0 technologies, and growing need for energy efficiency and cost savings. Additionally, the segment benefits from the company's strong brand portfolio, innovative product offerings, and strategic acquisitions.

Industrial Systems

Expected Growth: 3%

Regal Rexnord's Industrial Systems segment growth is driven by increasing demand for energy-efficient solutions, rising adoption of Industry 4.0 technologies, and growing need for predictive maintenance. Additionally, the company's strategic acquisitions and expansion into emerging markets contribute to its growth momentum.

7. Detailed Products

Motors

Regal Rexnord's motors are designed for industrial applications, providing reliable and efficient power transmission solutions.

Gearboxes

Regal Rexnord's gearboxes are designed to provide speed reduction, increase torque, and change the direction of rotation for industrial applications.

Bearings

Regal Rexnord's bearings are designed to reduce friction and wear on moving parts, providing smooth and efficient operation.

Couplings

Regal Rexnord's couplings are designed to connect and disconnect rotating shafts, providing flexible and reliable power transmission.

Conveyors

Regal Rexnord's conveyors are designed to transport materials and products in various industries.

Pumps

Regal Rexnord's pumps are designed to transfer fluids and gases in various industrial applications.

Filtration Systems

Regal Rexnord's filtration systems are designed to remove contaminants and impurities from fluids and gases.

8. Regal Rexnord Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Regal Rexnord Corporation operates in a industry with moderate threat of substitutes. The company's products are specialized and have a high switching cost, which reduces the likelihood of customers switching to substitutes.

Bargaining Power Of Customers

Regal Rexnord Corporation has a diverse customer base, which reduces the bargaining power of individual customers. The company's products are also customized to meet specific customer needs, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

Regal Rexnord Corporation has a moderate bargaining power of suppliers. The company relies on a few key suppliers for critical components, which gives them some bargaining power. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

Regal Rexnord Corporation operates in an industry with high barriers to entry, including significant capital requirements and regulatory hurdles. This reduces the threat of new entrants and allows the company to maintain its market position.

Intensity Of Rivalry

Regal Rexnord Corporation operates in a highly competitive industry with several established players. The company faces intense competition from rivals, which puts pressure on prices and margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 50.04%
Debt Cost 3.95%
Equity Weight 49.96%
Equity Cost 9.68%
WACC 6.81%
Leverage 100.17%

11. Quality Control: Regal Rexnord Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
EnPro

A-Score: 4.8/10

Value: 1.8

Growth: 4.6

Quality: 6.3

Yield: 1.0

Momentum: 8.5

Volatility: 6.7

1-Year Total Return ->

Stock-Card
John Bean Technologies

A-Score: 4.4/10

Value: 4.4

Growth: 5.1

Quality: 3.0

Yield: 0.0

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

Stock-Card
SPX Technologies

A-Score: 4.3/10

Value: 1.4

Growth: 6.0

Quality: 6.2

Yield: 0.0

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

Stock-Card
Mirion Technologies

A-Score: 4.1/10

Value: 1.1

Growth: 4.4

Quality: 5.4

Yield: 0.0

Momentum: 10.0

Volatility: 4.0

1-Year Total Return ->

Stock-Card
Generac

A-Score: 4.1/10

Value: 2.8

Growth: 6.7

Quality: 6.2

Yield: 0.0

Momentum: 4.5

Volatility: 4.3

1-Year Total Return ->

Stock-Card
Regal Rexnord

A-Score: 3.8/10

Value: 5.1

Growth: 4.0

Quality: 4.8

Yield: 2.0

Momentum: 2.0

Volatility: 4.7

1-Year Total Return ->

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

143.25$

Current Price

143.25$

Potential

-0.00%

Expected Cash-Flows