Rexnord Corporation (NYSE:RXN), which is in the machinery business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $31.6 and falling to the lows of $21.7. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Rexnord’s current trading price of $22.73 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Rexnord’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Rexnord
Is Rexnord still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.9% below my intrinsic value, which means if you buy Rexnord today, you’d be paying a fair price for it. And if you believe that the stock is really worth $23.66, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Rexnord’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Rexnord look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Rexnord’s earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in RXN’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on RXN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Rexnord. You can find everything you need to know about Rexnord in the latest infographic research report. If you are no longer interested in Rexnord, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.
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