Regal Rexnord: Cycle-Proofing In Progress, Upside Ahead

2025-08-08 07:56:51 ET

Investment Thesis

At this point, I'd argue Regal Rexnord ( RRX ) looks meaningfully undervalued, driven by a mix of internal improvements and exposure to longer-term, secular growth trends. Over the past few years, the company has repositioned itself into a broad-based industrial motion platform, with around half of its revenue tied to end-markets that aren't overly sensitive to the economic cycle. Think HVAC upgrades, electrified mining operations, energy efficiency retrofits, and more recently, automation and robotics. These aren't just end-markets, they're evolving demand pools, and RRX is increasingly embedded in the systems that serve them. That's not where RRX lived five years ago....

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