Core Thesis - Regal Rexnord Corporation (RRX) has transitioned from a traditional electric motor and power transmission manufacturer to a global leader in sustainable motion and power solutions, with a market cap of $8.9 billion and revenues of $6 billion [2] Financial Performance - RRX's trailing and forward P/E ratios are 39.17 and 13.09, respectively, indicating potential valuation upside [1] - The company has achieved EBITDA margins around 22% and has improved operational efficiency, resulting in gross margin expansion of 1,100 basis points and EBITDA margin improvement of 700 basis points since 2019 [2][3] Business Segments - RRX operates three segments: - Automation & Motion Control (AMC) with 5% growth and 22% EBITDA margins - Industrial Powertrain Solutions (IPS) with 4% growth and 26% EBITDA margins - Power Efficiency Solutions (PES) with growth below company average and 16% EBITDA margins [3] Strategic Acquisitions - Over the past decade, RRX has made strategic acquisitions, including Emerson Electric's Power Transmission Solutions in 2015, Rexnord's industrial power transmission business in 2021, and Altra Industrial Motion in 2023, enhancing its AMC and IPS segments while divesting lower-growth businesses [2] Future Outlook - RRX's targets for 2027 include revenues of $6.4–7.0 billion, 40% gross margins, and 25% EBITDA margins, all exceeding current street expectations, indicating potential upside [3] - Positive backlog trends in AMC and IPS, along with delivered synergies, support confidence in achieving these targets [4] Valuation and Catalysts - RRX's shares trade at reasonable multiples, with an EBITDA multiple of 10.2x and P/E of 13x, suggesting upside potential if execution aligns with targets [4] - Key catalysts include upcoming quarterly earnings, which could validate growth, margin expansion, and free cash flow improvements, enhancing investor confidence [4]