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New Lifetime High Today: Rexnord (RXN)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Rexnord ( RXN) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Rexnord as such a stock due to the following factors:

  • RXN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.3 million.
  • RXN has traded 13,889 shares today.
  • RXN is trading at a new lifetime high.

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More details on RXN:

Rexnord Corporation designs, manufactures, markets, and services process and motion control, and water management products worldwide. The company operates through two segments, Process & Motion Control Platform and Water Management Platform. RXN has a PE ratio of 222.5. Currently there are 2 analysts that rate Rexnord a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Rexnord has been 379,800 shares per day over the past 30 days. Rexnord has a market cap of $2.9 billion and is part of the industrial goods sector and industrial industry. Shares are up 6.8% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Rexnord as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk.

Highlights from the ratings report include:

  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Machinery industry and the overall market, REXNORD CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 4.56 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, RXN's quick ratio is somewhat strong at 1.28, demonstrating the ability to handle short-term liquidity needs.
  • This stock has increased by 41.95% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • 39.91% is the gross profit margin for REXNORD CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.86% trails the industry average.
  • Net operating cash flow has significantly increased by 107.63% to $84.30 million when compared to the same quarter last year. In addition, REXNORD CORP has also vastly surpassed the industry average cash flow growth rate of 24.56%.

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