We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Industrial goods manufacturer Regal Beloit Corporation (RBC - Free Report) reported decent first-quarter 2017 results despite a challenging macroeconomic environment. On a GAAP basis, the company reported earnings of $1.02 per share compared with 93 cents in the year-earlier quarter. The significant year-over-year improvement in GAAP earnings despite lower revenues was primarily due to a fall in operating expenses.
Adjusted earnings for the quarter were $1.07 per share compared with 95 cents in the year-ago quarter. Adjusted earnings beat the Zacks Consensus Estimate of 96 cents.
Regal Beloit Corporation Price, Consensus and EPS Surprise
Net sales fell to $813.5 million from $818.2 million in the year-earlier quarter owing to adverse foreign currency translation impact and divestitures. However, quarterly revenues beat the Zacks Consensus Estimate of $810 million.
Gross profit for the reported quarter decreased to $215.6 million from $217.4 million a year ago, due to lower revenues. GAAP operating income decreased to $140.8 million from 148.1 million in prior-year quarter. Adjusted operating income was $27.4 million compared with $21.8 million in the year-ago quarter for respective adjusted operating margins of 7.2% and 5.8%.
Segmental Analysis
Revenues from the Power Transmission Solutions segment decreased 9.8% year over year to $173.7 million. Sales were affected by foreign currency translation and the Mastergear divestiture along with softness in the oil & gas end market. Operating margin (GAAP) improved to 13.0% from 8.7% in the prior-year quarter, primarily owing to lower operating expenses.
Net sales in the Commercial and Industrial System segment were $381.2 million, flat year over year. Operating margin improved to 6.8% from 5.7%, driven by simplification initiatives and right-sizing of oil & gas business.
Net sales from the Climate Solutions segment were $247.7 million, up 3.3% year over year due to strength in the North American residential HVAC (heating, ventilation, air conditioning) market, partially offset by softness in the Middle East. Operating margin increased to 12.6% from 10.3%.
Balance Sheet and Cash Flow
As of Mar 31, 2017, Regal Beloit’s cash and cash equivalents were $262.3 million while long-term debt was $1,269.1 million. The company paid down $50.1 million of debt during the quarter.
Net cash from operating activities for the quarter totaled $50.5 million, down from $58.6 million in the year-ago period. Free cash flow was 72.4% of net income or $33.5 million compared with the respective tallies of 105% and $43.7 million in first-quarter 2016.
Guidance
Although Regal Beloit expects sales to be affected by the continued weakness in industrial markets, organic growth is anticipated to be positive. For 2017, the company revised its adjusted earnings per share guidance in the range of $4.55–$4.95 (up from the earlier expectation of $4.50–$4.90) while GAAP earnings are expected in the range of $4.40–$4.80 (up from $4.35–$4.75). Regal Beloit continues to focus on simplification initiatives to lower operating costs and improve margins in the future.
Eaton has a long-term earnings growth expectation of 8.8%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 1.56%.
EnerSys is currently trading at a forward P/E of 16.7x.
3M Company has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22.5x.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Image: Bigstock
Regal Beloit (RBC) Beats Q1 Earnings & Revenue Estimates
Industrial goods manufacturer Regal Beloit Corporation (RBC - Free Report) reported decent first-quarter 2017 results despite a challenging macroeconomic environment. On a GAAP basis, the company reported earnings of $1.02 per share compared with 93 cents in the year-earlier quarter. The significant year-over-year improvement in GAAP earnings despite lower revenues was primarily due to a fall in operating expenses.
Adjusted earnings for the quarter were $1.07 per share compared with 95 cents in the year-ago quarter. Adjusted earnings beat the Zacks Consensus Estimate of 96 cents.
Regal Beloit Corporation Price, Consensus and EPS Surprise
Regal Beloit Corporation Price, Consensus and EPS Surprise | Regal Beloit Corporation Quote
Net sales fell to $813.5 million from $818.2 million in the year-earlier quarter owing to adverse foreign currency translation impact and divestitures. However, quarterly revenues beat the Zacks Consensus Estimate of $810 million.
Gross profit for the reported quarter decreased to $215.6 million from $217.4 million a year ago, due to lower revenues. GAAP operating income decreased to $140.8 million from 148.1 million in prior-year quarter. Adjusted operating income was $27.4 million compared with $21.8 million in the year-ago quarter for respective adjusted operating margins of 7.2% and 5.8%.
Segmental Analysis
Revenues from the Power Transmission Solutions segment decreased 9.8% year over year to $173.7 million. Sales were affected by foreign currency translation and the Mastergear divestiture along with softness in the oil & gas end market. Operating margin (GAAP) improved to 13.0% from 8.7% in the prior-year quarter, primarily owing to lower operating expenses.
Net sales in the Commercial and Industrial System segment were $381.2 million, flat year over year. Operating margin improved to 6.8% from 5.7%, driven by simplification initiatives and right-sizing of oil & gas business.
Net sales from the Climate Solutions segment were $247.7 million, up 3.3% year over year due to strength in the North American residential HVAC (heating, ventilation, air conditioning) market, partially offset by softness in the Middle East. Operating margin increased to 12.6% from 10.3%.
Balance Sheet and Cash Flow
As of Mar 31, 2017, Regal Beloit’s cash and cash equivalents were $262.3 million while long-term debt was $1,269.1 million. The company paid down $50.1 million of debt during the quarter.
Net cash from operating activities for the quarter totaled $50.5 million, down from $58.6 million in the year-ago period. Free cash flow was 72.4% of net income or $33.5 million compared with the respective tallies of 105% and $43.7 million in first-quarter 2016.
Guidance
Although Regal Beloit expects sales to be affected by the continued weakness in industrial markets, organic growth is anticipated to be positive. For 2017, the company revised its adjusted earnings per share guidance in the range of $4.55–$4.95 (up from the earlier expectation of $4.50–$4.90) while GAAP earnings are expected in the range of $4.40–$4.80 (up from $4.35–$4.75). Regal Beloit continues to focus on simplification initiatives to lower operating costs and improve margins in the future.
Regal Beloit presently has a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry include Eaton Corporation plc (ETN - Free Report) , EnerSys (ENS - Free Report) and 3M Company (MMM - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Eaton has a long-term earnings growth expectation of 8.8%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 1.56%.
EnerSys is currently trading at a forward P/E of 16.7x.
3M Company has a long-term earnings growth expectation of 9.7% and is currently trading at a forward P/E of 22.5x.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>