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RBC Bearings (ROLL) Poised to Grow on Robust Growth Drivers

Zacks

On Aug 10, we issued an updated research report on premium industrial goods firm, RBC Bearings Inc. ROLL. The company boasts impressive prospects in the quarters, making it a good investment choice for investors seeking exposure in the machinery industry.

Over the last month, shares of this Zacks Rank #2 (Buy) stock yielded a return of 2.56%, as against 1.44% loss incurred by the industry.

The company delivered a positive earnings surprise of 11% in first-quarter fiscal 2018 (ended Jul 1, 2017). It offers services across a broad range of end markets, but classifies its customers into two chief categories – industrial and aerospace. Aerospace sales improved 2.8% on the back of rise in aftermarket and distribution activities, as well as significant growth in aerospace original equipment manufacturing. In addition, industrial revenues climbed 12.1% year over year on the back of strong semiconductor, mining, general industrial and energy market sales. We believe that persistence of these optimistic aspects will likely bolster RBC Bearings' revenues in the quarters ahead.


RBC Bearings has also been trying to boost its profitability on the back of wider margins. Greater cost discipline and stronger volume are anticipated to improve near-term margins. Additionally, efficacious integration of the Sargent business (acquired in Apr 2015) will likely boost bottom-line performance in the quarters ahead.

Notably, the company anticipates this strategic buyout to add nearly $7.5 million synergies in the five years, following the closure of the deal in 2015.

Furthermore, RBC Bearings intends to lower its debt burden, buy back shares and fund growth-oriented investments with increased cash flow generation.

Other Stocks to Consider

Other top-ranked stocks in the industry are listed below;

AGCO Corporation AGCO, which sports a Zacks Rank #1 (Strong Buy) at present, generated an average positive earnings surprise of 39.70% over the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apogee Enterprises, Inc. APOG has an average positive earnings surprise of 3.42% for the last four quarters and currently carries a Zacks Rank #2.

Deere & Company DE carries a Zacks Rank #2 and has a remarkable average positive earnings surprise of 70.41% for the past four quarters.

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