This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

IPOs With Buzz: Rexnord, Millennial Media

NEW YORK ( TheStreet -- The IPOs with the most buzz this week are Rexnord (RXN - Get Report) and Millennial Media (MM - Get Report), and the two companies couldn't be more different from each other.

Rexnord is a leader in the decidedly unglamorous business of water management, while Millennial is in smartphone advertising.

Rexnord will be the largest deal on the calendar for the week as it hopes to raise $450 million through the sale of 23.7 million shares at $18 to $20 each. Some of the excitement about Rexnord is stemming from the success of Allison Transmissions' (ALSN) IPO as it seems investors are getting hungry for big industrial names.

Rexnord looks to be priced at a premium. At the mid-range, the stock's forward price-to-earnings ratio would be 38X. That compares to Danaher (DHR - Get Report), which trades at a forward P/E of 14.9X; ITT (ITT) is at 12X; and newcomer Xylem (XYL) is at 12.9X.

One of the complaints about Allison Transmissions, which is up 1.7% since it went public, was its debt. Well, Rexnord has even more debt that Allison. Its market cap-to-tangible book value is a negative 1.2 and it's coming off the acquisition of VAG Holdings for $238.6 million in October. Rexnord plans to use the proceeds of the IPO to pay off debt and pay Apollo Management (APO)a $15 million management termination fee. Apollo will still own 69% of Rexnord stock after the IPO.

IPO Desktop President Francis Gaskins agrees that the price is high, but thinks it's okay to buy Rexnord on the offering.

"Institutional buyers like companies with dominant market shares, in the hopes they can squeeze out more earnings going forward," he said. Rexnord says that more than 85% of its total net sales come from products where it is the share leader. Two-thirds of the company's revenue comes from motion control products like bearings and chains, while the remainder comes from water management products.

Meantime, mobile advertising has come under intense focus since the Facebook IPO. Facebook needs to increase advertising revenue off its mobile version because that's where the most active users are.

Millennial Media is a leading independent mobile advertising platform with a 16.7% market share, according to IDC. It's second only to Google (GOOG - Get Report), which has a 23.8% share, while Apple (AAPL) comes in third with a 15.1% share. Millennial Media is looking to raise $102 million through the sale of 10.2 million shares at $9 to $11 each.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DHR $91.56 0.00%
GOOG $625.61 0.00%
MM $1.72 0.00%
RXN $21.20 0.00%
AAPL $121.30 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs