Regal Rexnord (NYSE:RRX) Announces Earnings Results

Key Points

• Regal Rexnord beat quarterly expectations: EPS came in at $2.90 versus the $2.65 consensus, while revenue reached $1.59 billion and rose 6.1% year over year.
• Demand strengthened across several markets, including commercial HVAC, data centers, automation, aerospace and defense, and energy; October enterprise-wide orders increased 24%.
• The company raised its 2026 outlook to approximately $6.22 billion in sales and $10.75 in adjusted EPS, but warned that operational issues in its IPS segment could pressure margins and take several quarters to resolve.

Regal Rexnord (NYSE:RRX - Get Free Report) released its quarterly earnings results on Tuesday. The company reported $2.90 earnings per share for the quarter, topping analysts' consensus estimates of $2.65 by $0.25, reports. The firm had revenue of $1.59 billion during the quarter, compared to the consensus estimate of $1.56 billion. Regal Rexnord had a return on equity of 9.93% and a net margin of 5.35%. The business's revenue was up 6.1% on a year-over-year basis. During the same quarter in the prior year, the firm posted $2.51 EPS.

Here are the key takeaways from Regal Rexnord's conference call:

• Third-quarter results exceeded expectations: organic sales rose 6.1%, adjusted EPS excluding tariff refunds increased 8.4% to $2.72, and free cash flow reached $194 million. Net leverage improved to 2.9x adjusted EBITDA.
• Demand strengthened broadly, with third-quarter daily orders up 5.7% and October orders up 24% enterprise-wide. Commercial HVAC, data center-related products, discrete automation, aerospace and defense, and energy markets were notable areas of strength.
• Operational execution is limiting revenue conversion and margins, particularly in IPS, where plant throughput, material planning, and manufacturing inefficiencies increased past-due backlog. Management expects recovery to take several quarters and has paused most plant consolidations while prioritizing output.
• Regal Rexnord raised its 2026 sales outlook to approximately $6.22 billion and adjusted EPS midpoint to $10.75, while maintaining $600 million of free cash flow guidance. The outlook reflects stronger AMC and PES performance offsetting weaker IPS results.
• Management launched a broad portfolio review using growth, margin, cash generation, returns, and strategic fit criteria, and is exploring a sale of Autonomous Mobile Solutions, which represents a low-single-digit percentage of AMC sales. The company also expects approximately $550 million of E-Pod revenue in 2027, with shipments beginning in the first quarter.

Regal Rexnord Stock Up 11.3%

Shares of NYSE RRX traded up $18.14 during trading hours on Tuesday, hitting $179.06. The company had a trading volume of 1,426,696 shares, compared to its average volume of 1,140,816. The stock has a market capitalization of $11.92 billion, a P/E ratio of 36.71, a price-to-earnings-growth ratio of 1.28 and a beta of 1.09. The company has a quick ratio of 1.16, a current ratio of 2.28 and a debt-to-equity ratio of 0.66. Regal Rexnord has a 1-year low of $127.96 and a 1-year high of $247.80. The firm's 50 day moving average is $157.73 and its 200-day moving average is $189.29.

Regal Rexnord Dividend Announcement

The business also recently disclosed a quarterly dividend, which will be paid on Thursday, January 14th. Stockholders of record on Thursday, December 31st will be issued a $0.35 dividend. This represents a $1.40 annualized dividend and a dividend yield of 0.8%. The ex-dividend date of this dividend is Thursday, December 31st. Regal Rexnord's dividend payout ratio is presently 28.87%.

Wall Street Analyst Weigh In

RRX has been the topic of a number of research reports. The Goldman Sachs Group set a $216.00 price objective on shares of Regal Rexnord in a research report on Wednesday, September 30th. JPMorgan Chase & Co. decreased their target price on shares of Regal Rexnord from $240.00 to $196.00 and set an "overweight" rating for the company in a research report on Friday, October 9th. Wolfe Research set a $250.00 price target on shares of Regal Rexnord in a research note on Thursday, July 9th. Citigroup cut their price target on shares of Regal Rexnord from $220.00 to $200.00 and set a "buy" rating on the stock in a research report on Monday, October 12th. Finally, Wall Street Zen raised shares of Regal Rexnord from a "hold" rating to a "buy" rating in a research report on Saturday, October 24th. Eight investment analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company. According to data from MarketBeat, Regal Rexnord currently has an average rating of "Moderate Buy" and a consensus price target of $230.50.

Regal Rexnord Company Profile

Regal Rexnord Corporation is an industrial manufacturing company that develops and produces electric motors, power transmission components, motion-control systems and other equipment used in industrial and commercial applications. Its products include motors, gearboxes, bearings, couplings, belts, chains, drives, clutches, brakes and related controls, as well as air-moving and power-management solutions.

The company serves customers across industries such as automation, material handling, food and beverage, renewable energy, heating and ventilation, agriculture, and general industrial production.

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