Company Reports

RBC Bearings delivered record fiscal 2027 first-quarter results, with sales up 19.2% to $519.5 million and adjusted EBITDA up 28.1% to $181.2 million, led by strong aerospace and defense demand.

RBC Bearings is a US-based precision manufacturer of highly engineered bearings, gearing, and motion control components, serving aerospace and defense as well as a broad range of industrial end markets.

We initiate coverage of RBC Bearings, a US precision manufacturer of engineered bearings with a dominant sole-source franchise across aerospace, defense, and naval programs, and a leading North American industrial brand through Dodge.

RBC Bearings is a US-based precision manufacturer of highly engineered bearings, gearing, and motion control components, serving aerospace and defense as well as a broad range of industrial end markets.

We are dropping analyst coverage of RBC Bearings. We provide broad coverage of more than 1,500 companies across more than 90 industry groups and adjust our coverage as necessary based on client demand and investor interest.

As a provider of highly specialized mechanical bearings, RBC Bearings has made itself an integral part of its customers' design and manufacturing processes. RBC is a leading manufacturer of plain, roller, and ball bearings for a varied range of industries, including aerospace, oil and gas, mining, and heavy trucks. Close working relationships with customers have created high switching costs and barriers to entry for competitors. As such, we think narrow-moat RBC is set to reap benefits from secular growth in customer end markets.

We’re slightly increasing our fair value estimate for RBC Bearings to $52 per share from $51 following the release of first-quarter results. The minor boost is driven by the positive time-value-of-money effect. Our narrow moat rating and operating forecast remain intact. Following a roughly 20% decline in the share price since the beginning of 2014; RBC shares now trade much closer to our fair value.

As a provider of highly specialized mechanical bearings, RBC Bearings has made itself an integral part of its customers' design and manufacturing processes. RBC is a leading manufacturer of plain, roller, and ball bearings for a varied range of industries, including aerospace, oil and gas, mining, and heavy trucks. Close working relationships with customers have created high switching costs and barriers to entry for competitors. As such, we think narrow-moat RBC is set to reap benefits from secular growth in customer end markets.

We’re holding steady on our fair value estimate for RBC Bearings following the release of the company’s fourth-quarter and full-year results. Our narrow moat rating remains intact. With today’s drop in the stock price, RBC now sits closer to our fair value estimate of $51 per share, but we still believe the stock looks mildly overvalued. Shares have come down more than 15% in the past six months, and in our opinion, now reflect a more reasonable valuation.

As a provider of highly specialized mechanical bearings, RBC Bearings has made itself an integral part of its customers' design and manufacturing processes. RBC is a leading manufacturer of plain, roller, and ball bearings for a varied range of industries, including aerospace, oil and gas, mining, and heavy trucks. Close working relationships with customers have created high switching costs and barriers to entry for competitors. As such, we think narrow-moat RBC is set to reap benefits from secular growth in customer end markets.

We're raising our fair value estimate for RBC Bearings to $51 per share from $50 per share following the release of the firm's fiscal third-quarter results. The slight gain is due to the effect of the time value of money since our last update, partially offset by a marginal cut to our sales and profit forecast. RBC looks like it will struggle to achieve our previous fiscal 2014 revenue estimate and we have cut our near-term outlook accordingly. We're expecting sales to grow about 3% this year; however, we continue to believe that sales growth will accelerate over the next couple years as RBC reaps the benefits of its exposure to the growing commercial aerospace industry. We're keeping our narrow moat rating intact.

As a provider of highly specialized mechanical bearings, RBC Bearings has made itself an integral part of its customers' design and manufacturing processes. RBC is a leading manufacturer of plain, roller, and ball bearings for a varied range of industries, including aerospace, oil and gas, mining, and heavy trucks. Close working relationships with customers have created high switching costs and barriers to entry for competitors. As such, we think narrow-moat RBC is set to reap benefits from secular growth in customer end markets.

We're raising our fair value estimate for RBC Bearings to $50 per share from $47, following the release of fiscal second-quarter results. Most of the gain in our fair value estimate can be attributed to the impact of the time value of money since our last update. Additionally, we have slightly raised our long-term forecast, as we now have more confidence that RBC will improve profitability in its Ball Bearings segment. We are keeping our narrow moat rating intact. We believe RBC's shares look moderately overvalued.

We're not expecting much change in our $47 fair value estimate for RBC Bearings following the release of fiscal second-quarter results, as a positive impact from the time value of money will probably be at least partially offset by a cut to our near-term forecast. We are keeping our narrow moat rating intact. While sales were sluggish, advancing 1.6% year over year, the company continued to improve gross margin through cost-cutting and efficiency gains; gross margin clocked in at 39.8% in the quarter compared with 37.4% in the year-ago period.

As a provider of highly specialized mechanical bearings, RBC Bearings has made itself an integral part of its customers' design and manufacturing processes. RBC is a leading manufacturer of plain, roller, and ball bearings for a varied range of industries, including aerospace, oil and gas, mining, and heavy trucks. Close working relationships with customers have created high switching costs and barriers to entry for competitors. As such, we think narrow-moat RBC is set to reap benefits from secular growth in customer end markets.

We may marginally increase our $45 fair value estimate for RBC Bearings ROLL following the release of the company's first-quarter results. We are keeping our narrow moat rating intact. Sales dropped about 1% year over year, but the company used cost-cutting measures and efficiency gains to improve gross margins (39.4% versus 37.2% in the year-ago quarter). The firm has taken measures to restructure its large bearings business in an attempt to increase margins further.

As a provider of highly specialized mechanical bearings, RBC Bearings has made itself an integral part of its customers' design and manufacturing processes. RBC is a leading manufacturer of plain, roller, and ball bearings for a varied range of industries, including aerospace, oil and gas, mining, and heavy trucks. Close working relationships with customers have created high switching costs and barriers to entry for competitors. As such, we think narrow-moat RBC is set to reap benefits from secular growth in customer end markets.

We don't expect a big move in our fair value estimate for RBC Bearings ROLL following the release of fiscal fourth-quarter and full-year results. The company put up a solid fourth quarter, using cost-cutting measures and efficiency gains to help raise the gross margin year over year (37.9% from 35.4% in the fourth quarter of 2012), despite sales that dropped 7.5% compared with the prior-year period.

On Thursday, RBC Bearings ROLL released fiscal third-quarter results that fell below our expectations, and we may marginally lower our fair value estimate, as the company looks like it will fall short of our 2013 estimates. Sales crept forward, advancing 1.3% compared with the prior-year period. Sales are up about 5% year over year through the first nine months of fiscal 2013, tracking well below our expectation for double-digit sales growth for the full year. Operating margin came in at 19.9% in the quarter, expanding from 19.1% in the year-ago period. Our expectation for full-year 2013 operating margin is about 20%.

We don't expect much (if any) change to our fair value estimate for RBC Bearings ROLL following the release of the company's fiscal second-quarter results. Sales growth slowed in the quarter, advancing only 2.7% compared with the prior-year period; this is following several consecutive quarters of double-digit, year-over-year sales growth. Management said that mining and heavy truck demand weighed on revenue growth. We noted last quarter that RBC was likely to see some pressure from the slowing global economy, so slower growth does not come as a total surprise. That said, the company may have trouble meeting our current expectation of double-digit sales growth for fiscal 2013. However, RBC is tracking ahead of our full-year operating margin assumption of about 20%. The company's operating margin clocked in at 21.1% compared with 18.8% in the second quarter of 2012.