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Regal Beloit (RBC) Remains Well Poised for Long-Term Growth

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On May 15, we issued an updated research report on industrial goods manufacturer Regal Beloit Corporation (RBC - Free Report) .

Headquartered in Beloit, WI, Regal Beloit is a leading manufacturer of electrical and mechanical motion control products. Since its inception in 1955, Regal Beloit has re-branded itself and moved its corporate headquarters several times before finally settling in downtown Beloit. The company offers a wide array of stock model and customized electric motors, blowers, electric generators, transfer switches, switchgear, valves, gearboxes, power generation components and controls. Regal Beloit has manufacturing, sales and service facilities throughout the U.S., Canada, Mexico, Europe and Asia and markets its products to a diversified customer base across the globe including OEMs, distributors and end users.

Regal Beloit has outperformed the Zacks categorized Machinery-Electrical industry in the last three months with an average return of 4.8% compared with a 1.1% gain for the latter. Its long-term strategy involves organic growth through innovative products, broadening customer base, exploitation of new opportunities and tactical investments in emerging markets. Over the years, the company consolidated its product lines and streamlined brands to evolve as a dynamic enterprise. In order to drive continuous improvement, Regal Beloit follows ‘Compass Operating System’ that encompasses a common set of business processes, disciplines and lean Six Sigma tools. Backed by an “open-door” management style, this has helped the company gain a competitive advantage and reach more people in diverse markets around the world.



The company continues to focus on prudent investment decisions for a disciplined capital allocation, strong and flexible balance sheet position and cash flow enhancement to support dividend growth. Regal Beloit increased its quarterly dividend 8% year over year to 26 cents per share. We believe that such moves along with its robust operating platform and an efficient management team will help in the execution of its strategic priorities and drive net asset value. The company’s strong free cash generation is another positive, providing it an opportunity to pursue accretive acquisitions and unlock additional value. Going forward, Regal Beloit remains confident of generating robust operating cash flow to fund its organic and inorganic growth as well as to return significant capital to shareholders.

The company has expanded technologically and geographically on the back of its aggressive acquisition policy. Management further indicated that it plans to continue seeking accretive acquisitions as part of its overall growth strategy. The acquisition of Benshaw Inc. expanded Regal Beloit’s portfolio of customized electronic drives and controls. In addition, the strategic purchase of the Power Transmission Solutions business of Emerson Electric Co. further broadened its product portfolio, diversified end-market exposure and strengthened global footprint with complementary products and well-known brands. Subsequent to the acquisition, Regal Beloit reorganized its segments to improve transparency, simplify external communication with clients and align segment reporting with the new management structure. All these efforts augur well for the long-term growth of this Zacks Rank #2 (Buy) stock.

Other top stocks in the industry include Eaton Corporation plc (ETN - Free Report) , EnerSys (ENS - Free Report) and Barnes Group Inc. (B - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eaton has a long-term earnings growth expectation of 8.8%.  It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 3.3%.

EnerSys has a long-term earnings growth expectation of 9.5%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 5.1%.

Barnes has a long-term earnings growth expectation of 9.0%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 8.9%.

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