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Will Rexnord (RXN) Stock Be Affected By This Public Offering?

NEW YORK (TheStreet) -- Shares of Rexnord Corp. (RXN), a multi-platform industrial company, are down -3.40% to $25.29 on Thursday.

On Wednesday the company announced the pricing of its public offering of commons stock held by certain funds affiliated with Apollo Global Management, LLC. (APO).

Apollo funds will sell 15 million shares of Rexnord common stock at a price of $25.50 per share.

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Underwriters were given the option to purchase an additional 2,250,000 shares of common stock.

Rexnord will not issue any shares and will not receive any proceeds from the sale of the shares by the selling stockholders in the offering, the company said.

TheStreet Ratings team rates REXNORD CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate REXNORD CORP (RXN) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 3.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • REXNORD CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, REXNORD CORP increased its bottom line by earning $0.55 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($1.66 versus $0.55).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 211.9% when compared to the same quarter one year prior, rising from $9.20 million to $28.70 million.
  • 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 -4.30%.
  • 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.
  • You can view the full analysis from the report here: RXN Ratings Report
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