On May 25, we issued an updated research report on premium industrial goods firm, RBC Bearings Inc. ROLL.
The company intends to become the leading provider of precision engineered components and bearings in the market. In sync with this, this Zacks Rank #3 (Hold) company acquires potential businesses, enlarges its customer base, deploys capital for innovation investments and expands business in new end-markets.
The company believes robust industrial original equipment manufacturers’ (OEM) demand, and higher industrial distribution and aftermarket sales will drive its industrial sales in the quarters ahead. In addition, elevated Aero OEM’s demand and augmented build rates of single-aisle planes are expected to bolster the company’s aerospace revenues. Notably, RBC Bearings currently anticipates to report revenues in the range of $172-$175 million in fourth-quarter fiscal 2018 (ended March 2018).
Per our estimates, the stock’s projected year-over-year sales growth for fiscal 2019 is currently pegged at 9.1%.
RBC Bearings has been strengthening its bottom-line performance on the back of higher revenues and wider margins. Cost-reduction initiatives, consolidation programs and production-process improvements are expected to aid in widening the company’s margins in the upcoming quarters. Also, we believe lower corporate tax rates will help boost the company’s profitability, going forward.
Per our estimates, the stock’s projected year-over-year earnings growth for fiscal 2019 is currently pegged at 19.8%.
Furthermore, RBC Bearings has been improving its liquidity on the back of increased cash generation for 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.
Over the past month, RBC Bearings’ shares have rallied 4.4%, outperforming 1.9% growth recorded by the industry.