REGAL REXNORD CORP (RRX): what the price assumes
In the published model solve dated 2026-Q2, anchored at $157.43, REGAL REXNORD CORP (RRX) is priced for today's economics sustained for ~5.6 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.
Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/RRX
Headline
| Field | Value |
|---|---|
| Ticker | RRX |
| Company | REGAL REXNORD CORP |
| Current price | $157.43/sh |
| Composition | North America 70% / Asia 7% / Europe 17% / Rest-of-World 6% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 4.2% |
| Operating margin today | 11.7% |
| Margin compression (value-band) | -7.5pp |
| Must persist for | 5.6y |
| Multiple paid | 21x operating income |
The operating-margin figure is value-band context at year 7: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 10.5% cost of capital; growth searched up to the 25% self-funding ceiling.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.36σ |
| cohort percentile (of 225 peers) | 56 |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.47x | 5 | expensive |
| Earnings | 3.09x | 4 | expensive |
| Relative | 0.96x | 2 | justifies |
| Growth | 1.07x | 3 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $147.26 | 1.07x | yes | FCF base $0.5B, growth 4% (input: historical growth), terminal g 3.5%, WACC 6.8%, 5yr projection |
| DCF Exit Multiple | Growth | $147.24 | 1.07x | yes | Exit EV/EBITDA: 15.2x / 17.2x / 19.2x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | — | — | no | P/E 22.31x (blended: static sector reference 18x + trailing (TTM) 32x), scenarios: 18.8x / 22.3x / 25.8x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $52.58 | 2.99x | yes | BV/sh $103.85, ROE (TTM) 4.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $35.20 | 4.47x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $114.06 | 1.38x | yes | Rev $6.1B, growth 4% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.7x / 2.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $149.96 | 1.05x | yes | EPS $4.85, growth 31% (input: historical EPS growth), PEG=1.05 (Fair) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $49.67 | 3.17x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.64B × (1−19%) / WACC 6.8% → EPV (no growth) |
| Residual Income | Asset | $32.03 | 4.92x | yes | BV $103.85 + 5yr PV of (ROE (TTM) 4.7% − Kₑ 9.3%) × BV; BV grows 3.0%/yr |
| Graham Number | Asset | $106.45 | 1.48x | yes | √(22.5 × EPS $4.85 × BVPS $103.85) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.86B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $10.76 | 14.63x | yes | FCF $466.3M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $6.23 | 25.27x | yes | SBC-adj FCF $0.44B (FCF $0.47B − SBC $0.03B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | $156.49 | 1.01x | yes | EPS $4.85 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $23.87 | 6.60x | yes | BV $103.85 × (ROIC 1.6% / WACC 6.8%) |
| P/Sales Sector | Relative | — | — | no | Revenue $6.06B × sector P/S 2.5x |
| PEG Fair Value | Relative | $181.88 | 0.87x | yes | EPS $4.85 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $52.43 | 3.00x | yes | EPS $4.85 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Automation & Motion Control (AMC) | operating | enterprise | $1.7b | $133.9m operating-income | withheld | unresolved no unit value |
| Industrial Powertrain Solutions (IPS) | operating | enterprise | $2.6b | $337.5m operating-income | withheld | unresolved no unit value |
| Power Efficiency Solutions (PES) | operating | enterprise | $1.7b | $209.4m operating-income | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $4.4b |
| Net debt / NOPAT (after-tax) | 7.62x |
| Net debt / operating income (pre-tax) | 6.19x |
| Interest coverage | 2.1x |
| Share count CAGR (buyback) | -0.1% |
| Burning cash | no |
Bullet Takeaways
- Regal Rexnord is a motion-control and power-transmission maker built largely through acquisition, running three segments across automation, power transmission, and motors on about $5.9 billion of sales.
- The valuation is the standout problem: at roughly 29 times trailing operating income, no standard method reaches the price, because GAAP operating profit is still weighed down by acquisition amortization.
- The watch item is deleveraging and margin recovery: net debt to adjusted EBITDA was 3.31x in Q1 2026 and management reaffirmed 2026 adjusted EPS guidance of $10.20 to $11.00.
Bull Case
Valuing Regal Rexnord requires reading it as a company mid-integration rather than at steady state, because its reported operating margin is artificially depressed. The business designs and makes the components that move machines: the filing describes segments serving "general industrial, metals and mining, energy, discrete automation and commercial HVAC" and a motors segment producing "fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, electronic drives, fans and blowers". These are entrenched, specified-in products, the kind an equipment maker designs around and does not casually re-source. The bull case is that once acquisition amortization rolls off and the integration completes, the true earnings power is well above what the GAAP line currently shows.
The operating signals point that way. Q1 2026 net income rose to $64.3 million from $57.3 million and diluted EPS climbed to $0.96 from $0.86, with gross margin holding at a healthy 37.2%. Management raised full-year sales guidance and pointed to enterprise orders and backlog growing across most segments, with the automation and power-transmission businesses called out for momentum. A 37% gross margin paired with growing backlog is the raw material from which operating margin expands as volume leverages the fixed base.
Deleveraging is the second leg. Net debt to adjusted EBITDA was 3.31x in Q1 2026, and the company refinanced $1.1 billion of 2026 notes during the quarter, pushing out the maturity wall. As debt comes down and amortization fades, more of the operating cash flow accrues to equity. Management reaffirmed 2026 adjusted EPS guidance of $10.20 to $11.00 and confirmed a CEO transition that signals strategic continuity. The bull thesis is mechanical: backlog plus margin recovery plus deleveraging, compounding into earnings that the depressed trailing figures understate.
Bear Case
The advantage Regal Rexnord is supposed to have, durable component franchises, is showing signs of erosion at exactly the segment that was meant to lead. Management called out adjusted EBITDA margin pressure in the automation business from rare-earth magnet supply constraints and tariff cost timing, with recurring margin compression flagged in Q1. A motion-control supplier dependent on rare-earth magnets it does not control is exposed to an input the bull thesis quietly assumes away, and the shift toward original-equipment-manufacturer sales the company described carries lower margins than the aftermarket business it is partly replacing.
The leverage turns that operational softness into a real risk. Net debt is roughly $4.4 billion, and on trailing operating income, which is held down by acquisition amortization, interest is covered only about 2 times. Even on the company's preferred adjusted-EBITDA basis the leverage is 3.31x, which is manageable but leaves little room if the cyclical end markets, general industrial, metals and mining, energy, soften together. The 2026-notes refinancing pushed out the maturity, but it did so partly with revolver borrowings and a term facility, so the debt was rolled rather than retired.
Then there is the valuation itself, which is unusual for an industrial: no standard method reaches the price. The asset-value, earnings-power, peer-multiple, and even forward-growth lenses all land below the quote, several of them far below, because they price the earnings the company actually reports rather than the earnings the bull case projects after integration. That makes the stock a bet on a forecast, not on demonstrated results. If amortization does not roll off into clean margin expansion, or if the magnet and tariff headwinds persist, there is no value-method floor anywhere near $226 (June 28, 2026) to catch the fall. The filing also flags execution risk from divesting its industrial motors and generators business, including the difficulty of eliminating the corporate overhead that segment carried. A levered company priced for a recovery it has not yet delivered has the thinnest margin for error in this peer group.
Valuation
The price makes a demanding bet, and the methods are unanimous that it is demanding. At about 29 times trailing operating income, no valuation family reaches the price: it is rich on assets, on earnings power, on peer multiples, and even on forward growth. That is rare for an industrial, and the explanation is partly mechanical. Trailing GAAP operating income is depressed by amortization from the acquisitions that built the company, so the 29 times multiple overstates how expensive the steady-state business is. But even crediting that, the price requires operating profit to compound near its self-funding ceiling for roughly nine years, an outcome only about one in six comparable companies has sustained that long.
The pattern is the cleanest possible statement of a forecast-dependent stock. Because every static method lands below the price, the entire valuation rests on the integration thesis: amortization rolling off, margin recovering from today's roughly 11% toward the company's targets, and deleveraging shifting cash flow to equity. The forward-growth methods come closest but still sit below the price, which means even a generous growth assumption does not fully justify the quote on reported numbers.
Solvency is where the bet is most exposed. Net debt of roughly $4.4 billion is about 6.6 times trailing operating income, and on that basis interest is covered only about 2 times; on the company's adjusted-EBITDA basis the leverage is a more comfortable 3.31x. The two figures disagree precisely because of the amortization drag, which is the same thing that makes the multiple look extreme. The decisive question for the valuation is whether reported operating earnings converge upward toward the adjusted figures as integration completes. If they do, the price looks less stretched than 29 times suggests; if they do not, there is no method holding it up.
Catalysts
Q1 2026 showed gradual progress on the recovery narrative. Net income rose to $64.3 million from $57.3 million a year earlier and diluted EPS increased to $0.96 from $0.86, with gross margin holding at 37.2% even as operating margin slipped to about 10.3%. Management raised full-year sales guidance and pointed to enterprise orders and backlog growing across most segments, with the automation and power-transmission units highlighted for momentum, while reaffirming 2026 adjusted EPS guidance of $10.20 to $11.00.
The balance sheet moves are the other catalyst. The company refinanced $1.1 billion of 2026 notes during the quarter through an $850 million term facility and revolver borrowings, and reported net debt to adjusted EBITDA of 3.31x. It also confirmed a CEO transition to Aamir Paul, which management framed as continuity of strategy rather than a change in direction.
The live headwinds to watch are the rare-earth magnet supply constraints and tariff cost timing pressuring automation margins, which management flagged as recurring. The bull and bear both hinge on the same forward variables: whether margins recover as integration completes and headwinds ease, and whether deleveraging continues. The next earnings print and any progress on the magnet and tariff issues are the events that move the story.
Peer Cohorts (Per Segment, With Filing Citations)
Automation & Motion Control (AMC) (reported)
- ROK (Rockwell Automation, Inc.)
- FY2025 10-K: …sensing, industrial components, and configured-to-order products. The Software & Control segment includes control and visualization software and hardware, digital twin, simulation and information software, and network and security infrastructure. The Lifecycle Services segment includes digital consulting,…
- FY2025 10-K: …controls as the asset is created or enhanced, or (iii) our performance does not create an asset for which we have an alternative use and we have an enforceable right to payment for performance completed to date. If one or more of these criteria are met, then we recognize revenue over time using a method that depicts…
- ETN (EATON CORPORATION plc)
- FY2025 10-K: …as hazardous duty electrical equipment, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The majority of the sales contracts in this segment contain performance obligations satisfied at a point in time either…
- FY2025 10-K: …refueling systems, fuel pumps, fuel inerting products, sensors, valves, adapters and regulators; mission systems including oxygen generation system, payload carriages, and thermal management products; high performance interconnect products including wiring connectors and cables. The Aerospace segment also includes…
- EMR (EMERSON ELECTRIC CO.)
- FY2025 10-K: …sustainability and safety. The Discrete Automation segment includes solenoid valves, pneumatic valves, valve position indicators, pneumatic cylinders and actuators, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems and software,…
- FY2025 10-K: …Discussion and Analysis of Financial Condition and Results of Operations." INTELLIGENT DEVICES Final Control The Final Control segment is a leading global provider of control valves, isolation valves, shutoff valves, pressure relief valves, pressure safety valves, actuators, and regulators for process and hybrid…
- AME (AMETEK, Inc.)
- FY2025 10-K: …with EIG in China, Serbia, and Mexico. Automation and Engineered Solutions Markets and Products Automation and Engineered Solution sales represented 70% of EMG's 2025 net sales. These businesses produce precision motion control solutions, brushless motors, blowers and pumps, heat exchangers and other…
- FY2025 10-K: …New Product Development . New products are essential to AMETEK's long-term growth. As a result, AMETEK has maintained a consistent investment in new product development and engineering. AMETEK's businesses help solve our customers' most complex challenges with differentiated technology solutions. In 2025, AMETEK…
- NVT (nVent Electric plc)
- FY2025 10-K: …liquid and air, control buildings, switchgear systems and power distribution solutions help manage protect operating environments for mission critical applications in infrastructure, industrial and commercial verticals. • Electrical Connections -The Electrical Connections segment provides innovative solutions that…
- FY2025 10-K: …our customers. Our Spark management system defines how we operate. The five elements of Spark are People, Growth, Lean, Digital and Velocity. Together, they provide the mindset and operating system to propel the success of our company. Spark supports the high performance culture we are building at nVent. • People are…
- HLIO (HELIOS TECHNOLOGIES, INC.)
- FY2025 10-K: ODM considers budget-to-actual variances for key measures when making decisions about allocating capital to the segments. The Hydraulics segment designs and manufactures hydraulic components and systems used to transmit power and control force, speed and motion. There are two categories based on Hydraulic system…
- FY2025 10-K: …Joyonway, i3PD and Cygnus Reach brands. Financial information about our business segments is presented in Note 16 of the Notes to the Consolidated Financial Statements. Hydraulics We classify the key technologies within our Hydraulics segment into two categories based on Hydraulic system architecture: motion control…
Industrial Powertrain Solutions (IPS) (reported)
- TKR (TIMKEN CO)
- FY2025 10-K: …manufacturers, ship owners, pump makers and other global industrial customers that require advanced sealing systems. Timken offers other industrial sealing solutions that come in a variety of types and material options and are used in manufacturing, food processing, mining, power generation, chemical processing,…
- FY2025 10-K: …and repair capabilities. Timken Power Systems commonly serves customers in the power generation, hydro, fossil fuel, wind, water management, paper, mining, agriculture and general manufacturing sectors. Bearing Repair. Timken bearing repair returns used large-diameter bearings to like-new specifications, extending…
- DOV (DOVER Corp)
- FY2025 10-K: …service solutions used in textile, apparel, soft signage and specialty materials markets. Businesses within this segment leverage digital printing capabilities and operate business models that involve initial equipment and software sales followed by consumable, software, and service aftermarket revenue streams. Our…
- FY2025 10-K: …of traditional and clean fuels (including liquefied natural gas, hydrogen, and electric vehicle charging), cryogenic gases, and other hazardous substances along the supply chain, and safe and efficient operation of convenience retail, retail fueling and vehicle wash establishments. • Imaging & Identification segment…
- ITT (ITT INC.)
- FY2025 10-K: …end-users. IP's customers operate in global infrastructure and natural resource markets such as energy, chemical and petrochemical, pharmaceutical, general industrial, marine, mining, pulp and paper, food and beverage, power generation and biopharmaceutical. IP's marketplace-recognized brands include Goulds Pumps TM…
- FY2025 10-K: …and artificial intelligence continue to reshape manufacturing and industrial solutions. We view this shift as an opportunity to further enhance efficiency, reliability, and customer value but it also exposes us to additional cyber related risks and the possibility 30 that our competitors are able to adapt and utilize…
- GGG (GRACO INC.)
- FY2025 10-K: Industrial Segment The Industrial segment represented approximately 45 percent of our total sales in 2025. It includes the Industrial and Powder divisions. The Industrial segment markets equipment and solutions for moving and applying paints, powder coatings, sealants, adhesives and other fluids. Markets served…
- FY2025 10-K: …then supply to their customers. Industrial The Industrial division designs and manufactures liquid finishing and advanced fluid dispensing equipment; pumps to move chemicals, petroleum, food, and other fluids; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators.…
- IEX (IDEX CORP)
- FY2025 10-K: …energy, food processing, medical, packaging and transportation. Airtech maintains operations in Rutherford, New Jersey and has other manufacturing operations in Linthicum Heights, Maryland and Schweinfurt, Germany. Sealing Solutions. Sealing Solutions focuses on providing special seals and related products and…
- FY2025 10-K: …reducers and engineered pump systems. Pumps primarily uses independent distributors to market and sell its products. Pumps is comprised of the following businesses: 5 Table of Contents • Viking Pump is a global leader in pumping solutions, with products including internal gear, external gear, vane, lobe and…
- FELE (FRANKLIN ELECTRIC CO., INC.)
- FY2025 10-K: …compounded annual sales growth in developing regions in recent years. Water Systems competes in each of its targeted markets based on product design, quality, performance, availability and price. The Company's principal competitors in the specialty water products industry are Grundfos Management A/S, Pentair, Inc.…
- FY2025 10-K: …for the Company's growth as a global provider of water and energy systems, through geographic expansion and product line extensions, leveraging its global platform and competency in system design, all while consistently offering the best value to its customer. Markets and Applications The Company's business consists…
Power Efficiency Solutions (PES) (reported)
- AAON (AAON, INC.)
- FY2025 10-K: …plc), York Light Commercial (Bosch Home Comfort Group), Johnson Controls (Johnson Controls International PLC), Carrier (Carrier Global Corporation), and Daikin (Daikin Industries). Our thermal management products primarily compete with Vertiv (Vertiv Holdings Co.), STULZ (STULZ Air Technology Systems, Inc.), Munters,…
- FY2025 10-K: …deliver heating and cooling products to perform beyond all expectations and to demonstrate our quality and value to our customers. Our equipment is designed with energy efficiency in mind, without sacrificing premium features and options. In addition to our high standard of product performance, is a commitment to…
- LII (LENNOX INTERNATIONAL INC)
- FY2025 10-K: …segment. AES is a company dedicated to service and sustainability in the light commercial markets across North America. We sell our products and services through a combination of direct sales, distributors and company-owned stores. The demand for our products and services is seasonal and can be significantly impacted…
- FY2025 10-K: …customers in the U.S. and Canada. AES manufactures curb, curb adapters, drop box diffusers and also offers HVAC recycling and salvage services, as well as focusing on multi-family HVAC replacement for expired mechanical assets. In the fourth quarter of 2025, we acquired Duro Dyne Buyer, Inc. ("Duro Dyne"), which…
- AOS (A. O. Smith Corporation)
- FY2025 10-K: …lines of residential and commercial gas and electric water heaters, boilers, heat pumps, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. Our Rest of World segment is primarily comprised of China, India, and Europe. NORTH AMERICA Sales in our…
- FY2025 10-K: …osmosis products. We also offer a comprehensive line of commercial water treatment and filtration products. Typical applications for our water treatment products include residences, restaurants, schools and offices. Other. In our North America segment, we also manufacture expansion tanks, commercial solar water…
- NVT (nVent Electric plc)
- FY2025 10-K: …liquid and air, control buildings, switchgear systems and power distribution solutions help manage protect operating environments for mission critical applications in infrastructure, industrial and commercial verticals. • Electrical Connections -The Electrical Connections segment provides innovative solutions that…
- FY2025 10-K: …our customers. Our Spark management system defines how we operate. The five elements of Spark are People, Growth, Lean, Digital and Velocity. Together, they provide the mindset and operating system to propel the success of our company. Spark supports the high performance culture we are building at nVent. • People are…
- GNRC (GENERAC HOLDINGS INC.)
- FY2025 10-K: …operations. Enterprise Strategy The mega-trends and strategic growth themes that we have identified support our enterprise strategy, "Powering A Smarter World," and our purpose statement, "To lead the evolution to more resilient, efficient, and innovative energy solutions." As we continue to execute our strategic…
- FY2025 10-K: …aging and under-invested legacy infrastructure systems, such as energy production, telecommunications, transportation, and data centers. o Expanding investment for increasingly critical technology infrastructure as we transition to a more "connected" society. ● Home as a Sanctuary, driving increased demand for…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Regal Rexnord Q1 2026 earnings release, May 2026