Better End-Market Exposures Helping Rexnord Into 2020

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About: Rexnord Corporation (RXN)
by: Stephen Simpson, CFA
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Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst
Summary

Rexnord's leverage to parts versus capex and its above-average exposure to water, aerospace, and food/beverage should all be helpful at this point in the industrial cycle.

Rexnord continues to identify incremental margin opportunities, having already done a good job of offsetting tariffs and making the portfolio less project-dependent.

Rexnord shares are a borderline buy call and worth watching if the sector sells off in this upcoming earnings reporting cycle.

I liked Rexnord (RXN) a year ago, or at least I thought the company’s valuation was curiously low on a relative basis given the company’s end-market exposures and cost-reduction efforts. Since then, Rexnord