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Are Investors Undervaluing Regal Beloit (RBC) Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Regal Beloit (RBC) is a stock many investors are watching right now. RBC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 9.56, which compares to its industry's average of 21.09. RBC's Forward P/E has been as high as 15.67 and as low as 8.89, with a median of 12.45, all within the past year.

We also note that RBC holds a PEG ratio of 0.96. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RBC's industry currently sports an average PEG of 2.34. Over the past 52 weeks, RBC's PEG has been as high as 1.57 and as low as 0.89, with a median of 1.24.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RBC has a P/S ratio of 0.76. This compares to its industry's average P/S of 1.37.

Finally, investors should note that RBC has a P/CF ratio of 6.29. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 22.81. Over the past year, RBC's P/CF has been as high as 9.88 and as low as 5.85, with a median of 8.68.

These are only a few of the key metrics included in Regal Beloit's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RBC looks like an impressive value stock at the moment.


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