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RBC Bearings (ROLL) Up 1.6% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for RBC Bearings (ROLL - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is RBC Bearings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

RBC Bearings Q2 Earnings Top, Revenues Miss Estimates

RBC Bearings reported mixed second-quarter fiscal 2019 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.

Earnings/Revenues

Quarterly adjusted earnings came in at $1.22 per share, up 47% year over year. It outpaced the consensus estimate of $1.08.

Net sales in the reported quarter came in at $172.92 million, up 5.2% year over year. However, the figure missed the Zacks Consensus Estimate of $174 million. Notably, revenues improved 7.3% year over year, organically.

Segmental Break-Up

Revenues in the Plain bearings segment were $77.5 million, up 7% year over year. The

Roller bearings segment’s top line improved 14.6% to $37 million. Quarterly revenues in the Ball bearings segment came in at $18 million, up 9.1%. However, the Engineered products segment’s revenues were $40.4 million, down 6.3%.

Costs/Margins

Cost of sales in the reported quarter came in at $105.1 million, up 2.6% year over year.   Adjusted gross margin was 39.2%, up 150 basis points (bps).

Aggregate operating expenses in the fiscal second quarter were $31.9 million, up from $36.5 million recorded in the year-ago quarter. Adjusted operating margin was 20.8%, up 530 bps year over year.

Balance Sheet/Cash Flow

Exiting the fiscal second quarter, RBC Bearings had cash and cash equivalents of $60.4 million, up from $42.9 million recorded as of Sep 30, 2017. Total debt was $124.5 million, down from $220.2 million reported a year ago.

In the first six months of fiscal 2019, the company generated $57.9 million cash from operating activities, down from $64 million recorded in the year-ago period. Capital expenditures in the quarter totaled $10.8 million, up from $7 million incurred in second-quarter fiscal 2018.

Outlook

RBC Bearings intends to boost its near-term competency on the back of solid industrial and aerospace sales. The company anticipates generating revenues of $174-$176 million in third-quarter fiscal 2019 (estimating year-over-year growth of 4.3-5.5%).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, RBC Bearings has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, RBC Bearings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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