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what it is
Regal Rexnord makes the motors, controls, and motion parts that keep factories, warehouses, and large machines running.
how it gets paid
Last year Regal Rexnord made $6.0B in revenue. Industrial Powertrain was the main engine at $1.5B, or 25% of sales.
what just happened
Latest quarter revenue hit $3.1B, while EPS landed at $3.25 and gross margin reached 53.2%.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
80/100 earnings predictability — you can trust these numbers
14.8x trailing p/e — the market's not buying it — or you found a deal
1.0% dividend yield — cash in your pocket every quarter
8.0% return on capital — nothing to write home about
xvary composite: 54/100 — below average
What they do
Regal Rexnord makes the motors, controls, and motion parts that keep factories, warehouses, and large machines running.
Breadth matters here. Regal Rexnord operates across four segments, and 31% of 2024 sales came from outside North America. If one market slows, your exposure is still spread across powertrain, motors, controls, and motion products.
How they make money
$6.0B
annual revenue
Industrial Powertrain
$1.5B
Power Efficiency Solutions
$1.5B
Automation & Motion Control
$1.5B
Industrial Systems
$1.5B
The products that matter
industrial motion and control products
powertrain, motors, controls, and airflow hardware
$6.0B in sales · 30,000 associates
this is the whole business as presented in the source material: $6.0B in sales supported by about 30,000 associates. the missing segment split matters, because you are underwriting management execution more than a clean mix story.
one portfolio, many end markets
margin story
operating discipline
22.5% operating margin
a 22.5% operating margin on $6.0B of revenue says the company is not selling commodity scrap. if pricing slips or tariff costs stick, this is the number you watch first.
the number that mattered
capital allocation test
returns on invested capital
8.0% return on capital
8.0% means every $1 put into the business generates eight cents of profit. that is fine, not special, and it explains why the stock still trades like it has something to prove.
valuation ceiling
Key numbers
14.8x
trailing p/e
P/E → price-to-earnings → so what: you are paying 14.8 years of current earnings for a business earning $12.33 a share.
$181
18-month target
Target price → a published estimate of fair value → so what: that sits 26% above the current $143.18 stock price.
$175M
tariff exposure
Unmitigated tariff impact → direct cost pressure → so what: that equals about 2.9% of 2024 sales before fixes.
$4.8B
long-term debt
Debt load → money the company owes → so what: it equals 33% of capital and cuts your room for mistakes.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 40 / 100
- long-term debt $4.8B (33% of capital)
- net profit margin 13.6% — keeps 14 cents of every dollar in revenue
- return on equity 10% — $0.10 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in RRX 3 years ago → it's now worth $12,450.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Latest quarter revenue hit $3.1B, while EPS landed at $3.25 and gross margin reached 53.2%.
Quarterly EPS history shows 2025 finished at $2.51 in Q4 versus $2.34 in 2024 Q4. The bigger story is margin support and a stronger 2026 setup as tariff offsets improve.
$3.1B
revenue
$3.25
eps
53.2%
gross margin
the number that mattered
The number that mattered was 53.2% gross margin, because margin strength gives Regal Rexnord more room to absorb the $175 million tariff hit.
-
we look for a stronger year at regal rexnord in 2026.results have been rather stagnant at the company over the past several years, but we see growth ahead.
-
a shortage of rare earth magnets appears to be easing.these are powerful magnets that are used in the company's industrial motors, and better availability of them should boost sales this year. additionally, regal rexnord manufactures electrical pods that are customizable and modular making them a key component in data center construction. the company has a pipeline of $1 billion of projects to bid on in this realm, and it is adding capacity to support the rising demand. another area of potential growth is humanoids, which need the actuators, micro motors, and precision bearings that regal makes.
-
the company continues to take steps to mitigate tariff impacts.since they were first announced last spring, the timing and scale of increased trade sanctions has been uncertain. early on, management expected that the negative impact would be $60 million annually if no action was taken, but they could make moves to neutralize the effects within 2025.
-
as of late october, the unmitigated impact was estimated at $175 million.by realigning its supply chain, relocating production, and implementing selected price increases, management expects the tariff impact to be neutral in the first half of 2026.
-
an unexpected change in leadership is forthcoming.in october, the board of directors announced that it was commencing a ceo succession plan, without any detail.
source: company earnings report, 2026
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What could go wrong
the top risk is tariff costs hitting margins before pricing catches up. Regal Rexnord has already had to address tariff impacts in public, which tells you this is not a background issue.
high
tariff pass-through slips
Management said it expects tariff exposure to be dollar neutral by mid-year. If price increases or sourcing changes lag, that promise breaks.
On a $6.0B revenue base, every one-point hit to margin is about $60M of operating profit.
med
$4.8B of long-term debt limits flexibility
B++ balance sheet grade is fine. It is not the same as having a pristine balance sheet when the cycle gets worse.
Debt at 33% of capital means management has less room to absorb a weak demand patch or a margin miss.
med
returns stay stuck in the single digits
8.0% return on capital is the number that keeps the stock from getting a premium multiple.
If capital returns do not improve, 14.8x earnings may be fair rather than cheap.
med
industrial demand weakens before the $7B revenue path shows up
The 2028 revenue estimate points to $7B. That is useful only if the path there does not run through weaker orders and softer pricing.
You are not paying a nosebleed multiple, but a cyclical miss still compresses the upside case.
The risk stack is not exotic. It is margin pressure, leverage, and a market waiting for proof that 22.5% operating margin can coexist with better than 8.0% capital returns.
source: institutional data · regulatory filings · risk analysis
Pay attention to
calendar
the next earnings call needs to settle the tariff question
The number you care about is not just revenue. It is whether management still says tariffs are dollar neutral and whether margin holds near the current 22.5% level.
metric
22.5% operating margin versus 8.0% return on capital
One number says quality. The other says the market is still waiting. If those two do not move in the same direction, the stock stays stuck in the middle.
risk
pricing power against tariff costs
Regal Rexnord had to publish a tariff update in 2025 and discuss neutrality again in 2026. That tells you cost recovery is still a live issue, not old news.
trend
institutions have been net buyers for 3 straight quarters
246 buyers versus 192 sellers in 3q2025 is supportive. If that trend flips while returns stay mediocre, the valuation argument gets thinner.
Analyst rankings
earnings predictability
80 / 100
management tends to land close to guidance. in human-speak, analysts see a business that is easier to model than the stock is to love.
risk rank
3
middle-of-the-pack risk. you are not buying a fragile story, but you are not buying industrial perfection either.
price stability
40 / 100
the stock does not trade like a utility. the business may be steady enough to model, but the share price still moves like a cyclical industrial name.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 246 buyers vs. 192 sellers in 3q2025. total institutional holdings: 73.4M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$107
$255
$143
current price
$181
target midpoint · +26% from current · 3-5yr high: $270 (+90% · 18% ann'l return)
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