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RBC Bearings (ROLL) Offers Common & Preferred Stocks to Public (Revised)

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RBC Bearings Incorporated (ROLL - Free Report) announced the public offerings of its common shares and Series A mandatory convertible preferred stock. It also expects granting options to underwriters with respect to these offerings.

The company’s shares gained 0.44% yesterday, ending the trading session at $215.55.

Inside the Headlines

RBC Bearings’ common share offering is for 3 million shares, while the other offering is for $400 million worth of preferred stock. Notably, the preferred stock has a liquidation preference of $100 per share. It is worth noting here the preferred stocks will be converted into the company’s common shares on Oct 15, 2024.

The company intends on giving the underwriters an option to buy additional 0.45 million common stocks and Series A mandatory convertible preferred stocks worth $60 million. The option for underwriters is valid for 30 days. The net proceeds from the common stock offering are expected to be $605.6 million or $696.5 million if the underwriters exercise their options. Meanwhile, the preferred stock offering is expected to yield net proceeds of $387.2 million or $445.4 million if the underwriters exercise their options.

RBC Bearings anticipates using the net proceeds from the common stock and preferred stock offerings to fund the acquisition of Asea Brown Boveri Ltd’s DODGE mechanical power transmission division. The deal, valued at $2.9 billion, was announced by RBC Bearings in July and is anticipated to be complete in third-quarter fiscal 2022 (ending December 2021).

In addition, RBC Bearings plans on using the proceeds for paying fees and expenses related to the DODGE acquisition and satisfy general corporate purposes.

It is worth mentioning here that RBC Bearings’ shares outstanding at the end of first-quarter fiscal 2022 (ended Jul 3, 2021) were 25.3 million. We believe that the above-mentioned common stock offering along with preferred stocks, when converted into common stock, will increase the company’s common stock outstanding balance. A rise in shares outstanding will likely have adverse impacts on the company’s earnings per share.

Zacks Rank, Price Performance and Estimate Trend

With a market capitalization of $5.5 billion, RBC Bearings currently carries a Zacks Rank #3 (Hold). Strength in industrial markets, healthy backlog and favorable shareholder-friendly policies are beneficial. However, the persistence of weakness in the aerospace markets is concerning.

In the past three months, the company’s shares have gained 9.5% against the industry’s decline of 3.4%.


Zacks Investment Research
Image Source: Zacks Investment Research


In the past 60 days, the Zacks Consensus Estimate for its earnings has decreased 3.7% to $1.05 per share for the second quarter of fiscal 2022 (ending September 2021). The consensus estimate for fiscal 2022 (ending March 2022) at $4.49 and for fiscal 2023 (ending March 2023) at $5.14 reflects 0.2% and 0.8% increases from the 60-day-ago figures, respectively.

RBC Bearings Incorporated Price and Consensus


RBC Bearings Incorporated Price and Consensus

RBC Bearings Incorporated price-consensus-chart | RBC Bearings Incorporated Quote

Stocks to Consider

Three better-ranked stocks in the industry are EnPro Industries, Inc. (NPO - Free Report) , Kadant Inc. (KAI - Free Report) and Nordson Corporation (NDSN - Free Report) . All companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies have improved for the current year. Further, positive earnings surprise for the last reported quarter was 25.81% for EnPro Industries, 33.11% for Kadant and 14.15% for Nordson.

(We are reissuing this article to correct a mistake. The original article, issued on September 21, 2021, should no longer be relied upon.)