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Reasons Why Regal Beloit (RBC) Stock is Worth Buying Now
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Regal Beloit Corporation (RBC - Free Report) may interest investors that seek to gain exposure in the manufacturing electronics industry. Its healthy growth opportunities and strong fundamentals are its compelling points. Also, upwardly revised earnings estimates reflect prevailing bullish sentiments. The company currently carries Zacks Rank #2 (Buy).
It is based in Beloit, WI, and has a market capitalization of $4 billion. The company belongs to the Zacks Manufacturing - Electronics industry, which is part of the broader Zacks Industrial Products sector. The industry is in the top 28% (with rank of 70) of more than 250 Zacks industries.
In the past six months, the company’s shares gained 52.8% compared with the industry’s growth of 42.5%. During the same period, the sector rose 38.7% and the S&P 500 grew 34.7%.
Below we have discussed why it is prudent to invest in Regal Beloit now.
Top-Line Tailwinds: The company might benefit from slow recovery in orders. Though its orders declined 7% in July, it suggests an improvement from the fall of 31% in April, 27% in May and 14% in June.
The company predicts a year-over-year sales decline of 8-12% in the third quarter of 2020, way better than a decline of 27.4% recorded in the second quarter of 2020. The Zacks Consensus Estimate for revenues is pegged at $701 million for the third quarter.
Other Tailwinds: In the pandemic period, the company is committed toward providing services to customers and the safety of its workers. Also, cost-reduction measures are being taken to tackle the financial pressure.
In addition to the cost-saving measures, the company might benefit from its existing reorganization actions (80/20), supply-chain efforts and business restructuring measures. Total savings (permanent and temporary) in the second quarter was $14.5 million. The savings in the third quarter is expected to be $10 million, while add to $42 million in 2020.
Rewards to Shareholders: The company is committed toward rewarding shareholders handsomely through dividend payments. In the first half of 2020, it paid out dividends of $24.3 million, reflecting a 1.3% increase from the year-ago period.
It is worth mentioning here that the company announced a 7% (or two cents per share) increase in its quarterly dividend rate in April 2019. We believe that a healthy cash flow position will help it in rewarding shareholders, going forward.
Share repurchases are another way the company prefers to reward shareholders. In the first of half 2020, it bought back shares worth $25 million versus $55.9 in the year-ago comparable period. Notably, no shares were repurchased in the second quarter of 2020 as it suspended buyback activities due to the pandemic. Exiting second-quarter 2020, the company had $210 million of approved buyback program left.
Earnings Estimate Trend: Regal Beloit’s earnings estimates have been revised upward in the past 60 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at $4.66 for 2020, reflecting growth of 17.7% from the 60-day-ago figure. The same for 2021 has increased 6.6% to $5.84 during the same period.
It is worth noting here that four upward revisions have been recorded for both 2020 and 2021 in the past 60 days. There was no downward revision for 2020 and 2021 in the past 60 days.
Also, the consensus estimate for the third quarter of 2020 is pegged at $1.20, reflecting growth from 94 cents per share in the past 60 days. The revision came on the back of four upward revisions versus none downward.
Other Key Picks
Three other top-ranked stocks in the industry are II-VI Incorporated , EnerSys (ENS - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) . While IIVI currently sports a Zacks Rank #1 (Strong Buy), both EnerSys and Franklin Electric carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Further, earnings surprise for the last reported quarter was 51.28% for II-VI, 35.29% for EnerSys and 14.89% for Franklin Electric.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Reasons Why Regal Beloit (RBC) Stock is Worth Buying Now
Regal Beloit Corporation (RBC - Free Report) may interest investors that seek to gain exposure in the manufacturing electronics industry. Its healthy growth opportunities and strong fundamentals are its compelling points. Also, upwardly revised earnings estimates reflect prevailing bullish sentiments. The company currently carries Zacks Rank #2 (Buy).
It is based in Beloit, WI, and has a market capitalization of $4 billion. The company belongs to the Zacks Manufacturing - Electronics industry, which is part of the broader Zacks Industrial Products sector. The industry is in the top 28% (with rank of 70) of more than 250 Zacks industries.
In the past six months, the company’s shares gained 52.8% compared with the industry’s growth of 42.5%. During the same period, the sector rose 38.7% and the S&P 500 grew 34.7%.
Below we have discussed why it is prudent to invest in Regal Beloit now.
Top-Line Tailwinds: The company might benefit from slow recovery in orders. Though its orders declined 7% in July, it suggests an improvement from the fall of 31% in April, 27% in May and 14% in June.
The company predicts a year-over-year sales decline of 8-12% in the third quarter of 2020, way better than a decline of 27.4% recorded in the second quarter of 2020. The Zacks Consensus Estimate for revenues is pegged at $701 million for the third quarter.
Other Tailwinds: In the pandemic period, the company is committed toward providing services to customers and the safety of its workers. Also, cost-reduction measures are being taken to tackle the financial pressure.
In addition to the cost-saving measures, the company might benefit from its existing reorganization actions (80/20), supply-chain efforts and business restructuring measures. Total savings (permanent and temporary) in the second quarter was $14.5 million. The savings in the third quarter is expected to be $10 million, while add to $42 million in 2020.
Rewards to Shareholders: The company is committed toward rewarding shareholders handsomely through dividend payments. In the first half of 2020, it paid out dividends of $24.3 million, reflecting a 1.3% increase from the year-ago period.
It is worth mentioning here that the company announced a 7% (or two cents per share) increase in its quarterly dividend rate in April 2019. We believe that a healthy cash flow position will help it in rewarding shareholders, going forward.
Share repurchases are another way the company prefers to reward shareholders. In the first of half 2020, it bought back shares worth $25 million versus $55.9 in the year-ago comparable period. Notably, no shares were repurchased in the second quarter of 2020 as it suspended buyback activities due to the pandemic. Exiting second-quarter 2020, the company had $210 million of approved buyback program left.
Earnings Estimate Trend: Regal Beloit’s earnings estimates have been revised upward in the past 60 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at $4.66 for 2020, reflecting growth of 17.7% from the 60-day-ago figure. The same for 2021 has increased 6.6% to $5.84 during the same period.
Regal Beloit Corporation Price and Consensus
Regal Beloit Corporation price-consensus-chart | Regal Beloit Corporation Quote
It is worth noting here that four upward revisions have been recorded for both 2020 and 2021 in the past 60 days. There was no downward revision for 2020 and 2021 in the past 60 days.
Also, the consensus estimate for the third quarter of 2020 is pegged at $1.20, reflecting growth from 94 cents per share in the past 60 days. The revision came on the back of four upward revisions versus none downward.
Other Key Picks
Three other top-ranked stocks in the industry are II-VI Incorporated , EnerSys (ENS - Free Report) and Franklin Electric Co., Inc. (FELE - Free Report) . While IIVI currently sports a Zacks Rank #1 (Strong Buy), both EnerSys and Franklin Electric carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Further, earnings surprise for the last reported quarter was 51.28% for II-VI, 35.29% for EnerSys and 14.89% for Franklin Electric.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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