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Regal Beloit (RBC) Gains 11% in the Past Month: What's Driving It?

·3 min read

Shares of Regal Beloit Corporation RBC have rallied impressively in the past month. Solid fundamentals, healthy growth prospects and impressive financial performances seem to have boosted sentiments for the stock.

The Beloit, WI-based company belongs to the Zacks Manufacturing - Electronics industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is in the top 31% (with a rank of 78) of more than 250 Zacks industries. Regal Beloit’s market capitalization is $6 billion and it currently carries a Zacks Rank #2 (Buy).

In the past month, the company’s shares have gained 10.7% compared with the industry’s growth of 3.4%. Notably, the S&P 500 has risen 0.4% and the sector has grown 0.8% during the same period.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Factors Influencing the Stock

In the past month, Regal Beloit delivered impressive results for the second quarter of 2021. Earnings surpassed the Zacks Consensus Estimate by 11.76% in the quarter, with a sales beat of 7.87%. In the last reported quarter, the company’s earnings expanded 140% year over year on a 39.9% increase in net sales.

Impressive performances and growth prospects seem to have favored the past month’s hike in Regal Beloit’s share price. Strengthening pool pump and residential heating, ventilation, and air conditioning business are anticipated to aid its performance. Effective cost-saving actions are other tailwinds.

Regal Beloit’s policy of rewarding shareholders is likely to have strengthened the stock’s attractiveness. In the past month, the company got its board of directors’ approval to pay the quarterly dividend of 33 cents per share in October. The reward is applicable for shareholders at the close of the business on Oct 1.

Regal Beloit is progressing well with the deal to combine its operations with Rexnord Corporation’s RXN Process & Motion Control (“PMC”) segment. The transaction is expected to boost Regal Beloit’s product line and position it well as a provider of power transmission solutions. In the past month, the company announced planned changes, post the deal completion in the second half of 2021. It named the segment Motion Control Solutions (“MCS”), including its present power transmission business and the PMC segment.

For 2021, Regal Beloit anticipates adjusted earnings of $8.70-$9.00 per share, suggesting an increase of 53% (at the mid-point) from the previous year’s reported figure. Revenues are anticipated to grow in high-teens on a year-over-year basis.

The Zacks Consensus Estimate for the company’s earnings is pegged at $8.85 per share for 2021 and $9.68 per share for 2022, marking increases of 13% and 11.9% from the respective 30-days-ago figures. The consensus estimate for third-quarter earnings improved from $1.92 per share to $2.34. Such upward revisions in earnings estimates are reflective of healthy operating conditions for the company.

Regal Beloit Corporation Price and Consensus

Regal Beloit Corporation Price and Consensus
Regal Beloit Corporation Price and Consensus

Regal Beloit Corporation price-consensus-chart | Regal Beloit Corporation Quote

Regal Beloit’s Performance Versus Industry Players

Regal Beloit’s performance in the past month has been better than Eaton Corporation plc ETN and A. O. Smith Corporation AOS. These companies belong to the same industry as Regal Beloit. In the past month, Eaton’s shares have gained 8.2%, whereas A. O. Smith expanded 2.1%.

Notably, both Eaton and A. O. Smith carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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A. O. Smith Corporation (AOS) : Free Stock Analysis Report

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