Strength in business and consumer spending, along with growth in exports, is driving U.S. economic growth, of late. Moving ahead, the robust economic momentum is anticipated to spur infrastructure spending across the country. Against this backdrop, inventing in selective industrial stocks seems sensible now.
Among the numerous potential gainers in the Industrial Products sector, adding RBC Bearings Incorporated (ROLL - Free Report) to your portfolio will be a promising investment move at the moment. This stock currently carries a Zacks Rank #2 (Buy).
Why to Grab the Stock?
Tactical Business Strategy: RBC Bearingsintends to become the leading provider of precision-engineered components and bearings in the market. The company expects to meet this goal on the back of strategic acquisitions, customer-base enlargement, business expansion in new end-markets, higher after-market sales and innovative solutions’ development.
Top-Line Prospects: RBC Bearings’ year-over-year revenue growth was 3% and 9.7% in fiscals 2017 (ended March 2017) and 2018 (ended March 2018) respectively. The company’s top-line performance improved 7.4% year over year in first-quarter fiscal 2019. RBC Bearings believes robust industrial original equipment manufacturers’ (OEM) demand, and higher industrial distribution and after-market sales will drive its industrial sales in the quarters ahead. On the other hand, elevated Aero OEM’s demand and augmented build rates of single-aisle planes are expected to bolster the company’s aerospace revenues.
The company currently anticipates generating revenues of $171-$174 million in second-quarter fiscal 2019 (mention when the quarter will end). This projection reflects year-over-year growth of 4.1-5.9%.
Notably, the stock’s projected sales growth rates for fiscals 2019 (ending March 2019) and 2020 (ending March 2020) are pegged at 7.7% and 11.1% respectively.
Over the past three months, RBC Bearings’ stock has rallied 15.9%, outperforming 1.7% growth recorded by the industry.
Profitability: RBC Bearings pulled off an average positive earnings surprise of 6.48% in the past four quarters. The company’s adjusted earnings is first-quarter fiscal 2019 surpassed the Zacks Consensus Estimate by 10.6% and also came in 26.4% higher than the year-ago tally. The company perceives that its cost-reduction moves and stronger productivity will continue to boost the bottom-line growth trajectory in the near term.
The stock’s projected earnings growth rates for fiscal 2019 and 2020 are pegged at 22.2% and 15% respectively.
Liquidity: RBC Bearings has been improving its liquidity on the back of increased cash generation over the past few quarters. The company intends to lower its debt burden, fund new growth-oriented investments and provide higher returns to shareholders with these proceeds. For instance, in the fiscal first quarter 2019, RBC Bearings lowered its debt by $30.1 million.
Other Stocks to Consider
Some other top-ranked stocks in the sector are listed below:
Altra Industrial Motion Corp. (AIMC - Free Report) sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% over the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Advanced Emissions Solutions, Inc. (ADES - Free Report) carries a Zacks Rank of 2 (Buy). The company delivered an average positive earnings surprise of 16.40% over the preceding four quarters.
Alamo Group, Inc. also holds a Zacks Rank #2. The stock came up with an average positive earnings surprise of 6.06% during the same time frame.
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