Is Regal Rexnord Corp. overvalued or undervalued?

As of 5 May 2025, Regal Rexnord Corp. has moved from a valuation grade of very expensive to expensive, indicating a shift in perception towards its valuation. The company is currently considered overvalued based on its financial metrics. The P/E ratio stands at 33, which is significantly higher than the industry average of approximately 21.53, while its EV to EBITDA ratio is 11.97 compared to peers like Pentair plc at 16.85 and Graco, Inc. at 20.02. Additionally, the PEG ratio of 0.14 suggests that the stock may not be justified at its current price given its growth prospects.
In terms of profitability, Regal Rexnord Corp. has a ROCE of 5.99% and a ROE of 4.43%, both of which are relatively low compared to industry standards. The company's recent stock performance has been underwhelming, with a year-to-date return of -9.10%, contrasting with the S&P 500's gain of 2.44% over the same period. Overall, the combination of high valuation ratios and low profitability metrics leads to the conclusion that Regal Rexnord Corp. is overvalued in the current market environment.