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On Monday, Loop Capital analysts revised the price target for Regal Rexnord (NYSE:ZWS) Corp (NYSE:RRX) shares, reducing it to $200 from the previous $220, while maintaining a Buy rating on the stock. According to InvestingPro data, the stock has declined over 8% in the past week and is currently trading near its 52-week low of $130.94, suggesting significant market pressure. The company’s current valuation shows it trading slightly below its Fair Value. The adjustment follows a report that highlighted several challenges faced by the company, including customer delays, an unfavorable mix of products and services, and foreign exchange headwinds. These factors have impacted both the fourth quarter results and the first quarter guidance for the current year.
Despite these setbacks, Loop Capital remains optimistic about Regal Rexnord’s prospects. The analysts believe that the company’s guidance for the year 2025 is highly achievable, citing known interest expense and synergy savings as key drivers for earnings per share (EPS) growth. This is expected despite what is seen as lackluster demand in the first half of the year. InvestingPro analysis reveals strong fundamentals, with a healthy current ratio of 2.26 and a notable 53-year track record of consecutive dividend payments, demonstrating financial stability.
Regal Rexnord’s guidance indicates that organic growth is likely to remain flat, but the company is considered to be in a strong position to exceed expectations if order volumes start to pick up. The analysts pointed out that savings are expected to increase and the product mix should improve, especially with discrete automation sales. They also noted that longer-cycle orders have shown signs of improvement.
Loop Capital’s commentary underscores their confidence in Regal Rexnord’s ability to navigate through the current market challenges. The firm is reiterating its Buy rating while adjusting the target price to reflect the near-term obstacles, yet with a clear view that the company has the potential to perform well in the coming periods. For deeper insights into RRX’s valuation and growth prospects, InvestingPro subscribers can access 12 additional investment tips and a comprehensive Pro Research Report, which provides detailed analysis of the company’s financial health and future potential.
In other recent news, Regal Rexnord Corporation reported fourth quarter earnings that did not meet analyst expectations, with both revenue and earnings per share (EPS) falling short of consensus estimates. The industrial manufacturing company reported an adjusted EPS of $2.34 for the quarter, compared to the projected $2.47. Revenue was also lower than expected, coming in at $1.46 billion against the anticipated $1.49 billion.
Despite the earnings miss, Regal Rexnord provided an optimistic outlook for fiscal year 2025. The company forecasts a full-year EPS in the range of $9.60 to $10.40, with the midpoint of $10.00 surpassing the analyst consensus of $9.25. This projection reflects the company’s confidence in its long-term growth strategy, as stated by CEO Louis Pinkham.
However, it’s worth noting that Regal Rexnord did not provide specific revenue guidance for the upcoming fiscal year. These are some of the recent developments surrounding Regal Rexnord Corporation.
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