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A leading manufacturer of precision bearings and components, RBC Bearings Inc. (ROLL - Analyst Report) prepares to release its fiscal fourth-quarter 2013 results before the opening bell on May 29. In the last quarter, it delivered a negative earnings surprise of 10.17%. Let’s see how things are shaping up for the company prior to the announcement.

Factors to Consider

RBC Bearings’ revenue generation in fiscal third quarter 2013 was negatively impacted by a 12.2% decline in the Industrial sales due to lower movements in the mining and military markets. The company uses steel as its main raw material; however, as the prices of steel increase, it becomes challenging for the company to maintain its margins.

Also, for the first nine months of fiscal 2013, 12.0% of net sales were negatively impacted by currency fluctuations. It is apprehended that this risk will continue to hover around the company’s financials as it plans to penetrate foreign markets further.

Earnings Whispers

Our proven model does not conclusively show that RBC Bearings is likely to beat the Zacks Consensus Estimate in the upcoming quarter. To beat the estimate, a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3. However, this is not the case here due to the following reasons:

Negative Zacks ESP: RBC Bearings’ Most Accurate Estimate stands at 61 cents, while the Zacks Consensus is pegged slightly higher at 63 cents. This results in an Earnings ESP of -3.18%.

Zacks Rank #4 (Sell): RBC Bearing’s Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the industry you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Northwest Pipe Co. (NWPX - Snapshot Report) has an Earnings ESP of +7.69% and a Zacks Rank #2 (Buy).

MRC Global Inc. (MRC - Analyst Report) has an Earnings ESP of +1.92% and a Zacks Rank #3 (Hold).

Timken Co. (TKR - Snapshot Report) has an Earnings ESP of +1.01% and a Zacks Rank #3 (Hold).

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