Estimates have been rising for Rexnord
(RXN) following better-than-expected first quarter 2014 results and a favorable debt refinancing.It is a Zacks Rank #1 (Strong Buy) stock.Despite solid earnings momentum and growth potential, shares of Rexnord trade at a discount to their peers on a forward P/E and price-to-sales basis. This could present a good buying opportunity for investors.Rexnord Corporation is an industrial company that operates in two segments: Process & Motion Control and Water Management. The Process & Motion Control division manufactures specified, highly-engineered mechanical components used within complex systems. The Water Management division manufactures products that provide and enhance water quality, safety, flow control and conservation.First Quarter ResultsRexnord delivered better-than-expected results for the first quarter of its fiscal 2014 on July 31. Adjusted earnings per share came in at 23 cents, beating the Zacks Consensus Estimate by 3 cents.Net sales rose 3% to $508.7 million, ahead of the consensus of $499.0 million. This was driven by an 8% increase in the Water Management segment thanks to market share gains in the company's end-markets and increased alternative market sales in its non-residential construction end-markets.Estimates RisingFollowing solid Q1 results, management increased its full year sales and earnings guidance. The company now expects to see 2-4% sales growth and EPS between $1.12 and $1.18.This, along with a favorable debt refinancing, has prompted analysts to revise their estimates higher over the last few weeks, sending the stock to a Zacks Rank #1 (Strong Buy).The Zacks Consensus Estimate for 2014 is now $1.21, representing 30% EPS growth over 2013. The 2015 consensus is currently $1.59, corresponding with 31% annual EPS growth.You see can the nice bump in earnings estimates from analysts in this chart:Reasonable ValuationValuation looks very reasonable for Rexnord with shares trading at 14x 12-month forward earnings, a discount to the industry median of 15x.Its price to sales ratio of 1.0 is also below the peer group median of 1.7.The Bottom LineWith rising estimates, strong growth projections, and reasonable valuation, Rexnord offers investors attractive upside potential.Todd Bunton, CFA is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.