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RBC Bearings (ROLL) Down 19.3% YTD: What's Hurting the Stock?

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Shares of RBC Bearings Inc. (ROLL - Free Report) have lost 19.3% compared with the industry’s decline of 4.4% year to date. The decrease in share price primarily reflects the adverse impacts of the coronavirus pandemic on the company’s operational performance.

 


 

The company, with a $3.2-billion market capitalization, currently carries a Zacks Rank #5 (Strong Sell).

Factors Affecting the Company

RBC Bearings has been experiencing persistent softness in its industrial business. For instance, the business’ sales in the first quarter of fiscal 2021 (ended Jun 27, 2020) decreased 13.3% year over year. The decline was primarily attributable to weakness across natural resources, mining, oil and general industrial end-markets amid the coronavirus outbreak. The company believes that difficult end-market conditions in the wake of the pandemic will continue to affect the business’ performance in the first half of fiscal 2021.

Also, in the fiscal first quarter, sales of its overall aerospace business decreased 14.9%, owing to the persistent softness in the commercial aerospace end-market due to the pandemic. In the quarters ahead, the company expects the commercial aerospace business — including OEM and aftermarket — to continue to face headwinds from reduced air travel. For instance, the company’s revenues in the fiscal second quarter (ending September 2020) are anticipated to be $148-$152 million, suggesting a decline from $181.9 million reported in the year-ago quarter.

Notably, on a P/E (TTM) basis, RBC Bearings’ shares look overvalued compared with the industry, given the respective tallies of 26.85X and 26.42X. In addition, its current multiple is higher than the industry's six-month highest level of 26.42X. This makes us cautious about the stock.

In addition, the Zacks Consensus Estimate for the company’s earnings is pegged at $3.76 for fiscal 2021 (ending March 2021) and $4.34 for fiscal 2022 (ending March 2022), marking declines of 5.5% and 6.1% from the respective 30-day-ago figures. Notably, there have been two downward revisions in estimates for fiscal 2021 and three downward revisions in estimates for fiscal 2022 in the past 30 days.

Stocks to Consider

Some better-ranked stocks from the same space are Chart Industries, Inc. (GTLS - Free Report) , Helios Technologies, Inc. (HLIO - Free Report) and EnPro Industries (NPO - Free Report) . All the companies currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries delivered an earnings surprise of 10.17%, on average, in the trailing four quarters.

Helios Technologies delivered an earnings surprise of 46.04%, on average, in the trailing four quarters.

EnPro Industries delivered an earnings surprise of 248.29%, on average, in the trailing four quarters.

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