Seeking Alpha: Despite Attractive Market Shares, Rexnord Doesn't Look Too Interesting

More often than you might think, you find situations where there's a meaningful gap between the merits of the company and the merits of that company's stock. Rexnord (RXN) is a significant player in the process/motion control and water infrastructure spaces - two markets that not only have above-average long-term growth prospects, but where Rexnord holds the #1 or #2 market share position in the segments that produce about 85% of its revenue.

Put together market-leading positions, a credible management system/philosophy, and potential rebounds in key end-markets like construction, and I can see solid prospects for the business. The stock, though, doesn't make nearly so much sense to me. Even though the shares are down almost 10% over the past year, robust expectations for margins, cash flow, and/or EBITDA aren't enough to generate a fair value that makes these shares look appealing today.

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Despite Attractive Market Shares, Rexnord Doesn't Look Too Interesting