Back to top

Image: Bigstock

RBC Bearings (ROLL) Braves Risks on Strong Growth Drivers

Read MoreHide Full Article

On Jun 5, we updated a research report on premium machine tools & accessories company, RBC Bearings Incorporated .

Over the last six months, this Zacks Rank #3 (Hold) stock yielded a return of 25.9%, outperforming 12.3% growth recorded by the Zacks categorized Machinery-General Industrial industry.

Existing Scenario

RBC Bearings anticipates generating solid revenues in the upcoming quarters, on the back of sturdy semiconductor and other industrial end markets’ demand. Moreover, increased military engagement strategies and new federal budget initiatives are likely to bolster near-term aerospace and defence market sales. Notably, the company estimates first-quarter fiscal 2018 revenues within the $159–$161 million range, higher than $154.8 million net sales reported in first-quarter fiscal 2017.

Moreover, the successful integration of the Sargent business has been boosting the company’s profitability for the last few quarters. Notably, the company projects the strategic buyout to add nearly $7.5 million synergies over the next five years, following the closure of the deal in Apr 2015.

Additionally, RBC Bearings intends to lower its debt burden, introduce share buyback programs and fund growth-oriented investments with increased cash flow generation, moving ahead.

However, we notice that the Zacks Consensus Estimate for the stock moved south for both fiscal 2018 and 2019, over the last 30 days, underlining negative market sentiments.

Dismal pricing conditions prevailing in the energy market have been hurting the revenues generated by manufacturing and industrial companies like RBC Bearings. Oil prices are still low, when compared since mid of 2014. Choppy oil prices have been weighing over the extent of Greenfield investments made within the sector. As a result, lower investments made by oil companies are hurting the sales generated by heavy equipment, machinery parts and steel producers in the U.S..

Furthermore, other headwinds such as a stronger U.S. dollar or stiff industry rivalry might curtail the company’s near-term growth.

Stocks to Consider

Some better-ranked stocks in the industry are listed below:

Caterpillar Inc. (CAT - Free Report) delivered an average positive earnings surprise of 40.25% for the trailing four quarters and currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies, Inc. (AIT - Free Report) , which sports a Zacks Rank #1 at present, pulled off an average positive earnings surprise of 9.78% over the last four quarters.

Acco Brands Corporation (ACCO - Free Report) currently carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 79.74% for the past four quarters.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>              


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Caterpillar Inc. (CAT) - free report >>

Applied Industrial Technologies, Inc. (AIT) - free report >>

Acco Brands Corporation (ACCO) - free report >>