It has been about a month since the last earnings report for RBC Bearings . Shares have added about 11.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RBC Bearings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RBC Bearings Meets Q4 Earnings Estimates, Gives Bleak View
RBC Bearings reported in-line earnings results for the fourth quarter of fiscal 2020 (ended Mar 28, 2020). However, revenues surpassed the consensus estimate by 1.71%.
The machinery company’s adjusted earnings in the reported quarter were $1.33 per share, in line with the Zacks Consensus Estimate. Also, earnings were in line with the year-ago reported number.
For fiscal 2020, the company’s adjusted earnings per share were $5.07, reflecting growth of 4.8% from the previous year.
Revenue Details
In the quarter under review, RBC Bearings’ revenues of $185.8 million reflected year-over-year growth of 2%. Organic sales in the quarter rose 0.1% year over year.
The company noted that commercial aerospace in the quarter were adversely impacted by the pandemic, while issues with Boeing 737 Max also played spoilsport. Despite this weakness, the company’s overall aerospace business experienced a 4.3% increase in revenues. In addition, the company’s business in industrial markets suffered due to the pandemic and recorded a 1.9% year-over-year decline in revenues.
Also, revenues surpassed the Zacks Consensus Estimate of $183 million.
Exiting the reported quarter, the company had backlog of $478.6 million, up 7.5% year over year.
RBC Bearings reports net sales under four heads/segments that are discussed below:
Revenues from Plain bearings totaled $93.9 million, up 6.8% year over year while the same from Roller bearings declined 13.2% year over year to $31.4 million. Ball bearings’ revenues of $20.6 million were up 5.9% year over year. Revenues from Engineered products summed $39.9 million, up 3.4% year over year.
For fiscal 2020, the company generated revenues of $727.5 million, suggesting year-over-year growth of 3.6%.
Margin Profile
In the reported quarter, RBC Bearings’ cost of sales inched up 0.1% year over year to $109.3 million, representing 58.8% of net sales compared with 59.9% a year ago. Adjusted gross profit improved 5.1% year over year to $76.7 million. Margin inched up 120 basis points (bps) to 41.3%.
Selling, general and administrative expenses of $31 million were up 5.2% year over year, accounting for 16.7% of net sales. Adjusted operating income grew 4.2% year over year to $43 million. Adjusted margin inched up 50 bps year over year at 23.1%. Interest expense, net, declined 51.3% year over year to $399 million in the quarter.
Effective tax rate was 21.4% in the quarter under review compared with 20.8% in the prior-year quarter.
Balance Sheet and Cash Flow
Exiting the fiscal fourth quarter, RBC Bearings had cash and cash equivalents of $103.3 million, up 71.2% from $60.3 million recorded at the end of the previous quarter. Long-term debt was $16.6 million, up 2.4% sequentially.
The company also noted that it has outstanding revolving credit facilities of $259.1 million.
In fiscal 2020, the company generated net cash of $155.6 million from operating activities, up 43.4% from $108.5 million a year ago. Capital spending of $37.3 million fell 9.8% year over year.
During the fiscal year, the company repurchased shares worth $12.2 million, up from $5.2 million in the previous year.
Outlook
For fiscal 2021 (ending March 2021), RBC Bearings expects the pandemic to continue impacting its operations. It believes that commercial aerospace businesses — including OEM and aftermarket — will face headwinds while defense business will grow.
Meanwhile, the industrial businesses will suffer due to the pandemic in the first half of fiscal 2021 (ending September 2021) and demand might pick up thereafter.
For first-quarter fiscal 2020 (ending June 2021), the company predicts revenues of $150-$155 million, suggesting a decline from $182.7 million in the year-ago quarter.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
VGM Scores
Currently, RBC Bearings has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
RBC Bearings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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RBC Bearings (ROLL) Up 11.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for RBC Bearings . Shares have added about 11.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RBC Bearings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
RBC Bearings Meets Q4 Earnings Estimates, Gives Bleak View
RBC Bearings reported in-line earnings results for the fourth quarter of fiscal 2020 (ended Mar 28, 2020). However, revenues surpassed the consensus estimate by 1.71%.
The machinery company’s adjusted earnings in the reported quarter were $1.33 per share, in line with the Zacks Consensus Estimate. Also, earnings were in line with the year-ago reported number.
For fiscal 2020, the company’s adjusted earnings per share were $5.07, reflecting growth of 4.8% from the previous year.
Revenue Details
In the quarter under review, RBC Bearings’ revenues of $185.8 million reflected year-over-year growth of 2%. Organic sales in the quarter rose 0.1% year over year.
The company noted that commercial aerospace in the quarter were adversely impacted by the pandemic, while issues with Boeing 737 Max also played spoilsport. Despite this weakness, the company’s overall aerospace business experienced a 4.3% increase in revenues. In addition, the company’s business in industrial markets suffered due to the pandemic and recorded a 1.9% year-over-year decline in revenues.
Also, revenues surpassed the Zacks Consensus Estimate of $183 million.
Exiting the reported quarter, the company had backlog of $478.6 million, up 7.5% year over year.
RBC Bearings reports net sales under four heads/segments that are discussed below:
Revenues from Plain bearings totaled $93.9 million, up 6.8% year over year while the same from Roller bearings declined 13.2% year over year to $31.4 million. Ball bearings’ revenues of $20.6 million were up 5.9% year over year. Revenues from Engineered products summed $39.9 million, up 3.4% year over year.
For fiscal 2020, the company generated revenues of $727.5 million, suggesting year-over-year growth of 3.6%.
Margin Profile
In the reported quarter, RBC Bearings’ cost of sales inched up 0.1% year over year to $109.3 million, representing 58.8% of net sales compared with 59.9% a year ago. Adjusted gross profit improved 5.1% year over year to $76.7 million. Margin inched up 120 basis points (bps) to 41.3%.
Selling, general and administrative expenses of $31 million were up 5.2% year over year, accounting for 16.7% of net sales. Adjusted operating income grew 4.2% year over year to $43 million. Adjusted margin inched up 50 bps year over year at 23.1%. Interest expense, net, declined 51.3% year over year to $399 million in the quarter.
Effective tax rate was 21.4% in the quarter under review compared with 20.8% in the prior-year quarter.
Balance Sheet and Cash Flow
Exiting the fiscal fourth quarter, RBC Bearings had cash and cash equivalents of $103.3 million, up 71.2% from $60.3 million recorded at the end of the previous quarter. Long-term debt was $16.6 million, up 2.4% sequentially.
The company also noted that it has outstanding revolving credit facilities of $259.1 million.
In fiscal 2020, the company generated net cash of $155.6 million from operating activities, up 43.4% from $108.5 million a year ago. Capital spending of $37.3 million fell 9.8% year over year.
During the fiscal year, the company repurchased shares worth $12.2 million, up from $5.2 million in the previous year.
Outlook
For fiscal 2021 (ending March 2021), RBC Bearings expects the pandemic to continue impacting its operations. It believes that commercial aerospace businesses — including OEM and aftermarket — will face headwinds while defense business will grow.
Meanwhile, the industrial businesses will suffer due to the pandemic in the first half of fiscal 2021 (ending September 2021) and demand might pick up thereafter.
For first-quarter fiscal 2020 (ending June 2021), the company predicts revenues of $150-$155 million, suggesting a decline from $182.7 million in the year-ago quarter.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
VGM Scores
Currently, RBC Bearings has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
RBC Bearings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.