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Why RBC Bearings (ROLL) is an Attractive Bet for Investors

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RBC Bearings Incorporated ROLL is poised to benefit from strength in its businesses, acquired assets and a sound capital-deployment strategy.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The currently Zacks Rank #2 (Buy) player has a market capitalization of $5.9 billion. In the past year, the stock has gained 3.7% against the industry’s decline of 26.7%.

Let’s delve into the factors that make ROLL a smart investment choice at the moment.

Business Strength: RBC Bearings stands to benefit from strength in its industrial business, supported by robust demand across its general industrial, mining, semiconductor and energy end markets in the quarters ahead. In fourth-quarter fiscal 2022 (ended Apr 2, 2022), ROLL’s industrial segment sales increased 297.3% on a year-over-year basis.

Strong Initiatives: RBC Bearings’ product development initiatives and demand improvement for commercial aircraft components are predicted to be a tailwind over time. ROLL’s first-quarter fiscal 2023 (ending July 2022) revenues are likely to be in the range of $355-$365 million (including contribution from the DODGE buyout), indicating growth of 127.3-133.7% from the year-ago fiscal quarter’s reported figure.

Benefits From Buyouts: ROLL strengthens and expands its businesses by adding assets. The buyout of DODGE mechanical power transmission in November 2021 widened ROLL’s exposure in the industrial, aerospace and defense sectors, and expanded its product offerings and customer base. Following completion of the buyout, the transaction is expected to boost RBC Bearings’ cash EPS 40-60% in the first year.

Pro Shareholder Moves: ROLL is focused on rewarding its shareholders through share-repurchase programs. RBC Bearings repurchased shares worth $8.5 million in fiscal 2022 (ended Apr 2, 2022), reflecting an increase of 24.6% on a year-over-year basis. Also, in May 2019, its board of directors approved a $100-million share buyback plan. ROLL was left to repurchase shares worth $79.1 million under this program while exiting fiscal 2022.

Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for 2022 earnings has been revised 7% upward.

Other Stocks to Consider

Two other-top ranked companies from the industrial products sector are discussed below:

Greif, Inc. GEF presently sports a Zacks Rank #1. GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 6.7% in the past year.

Titan International, Inc. TWI presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.

In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 77% in the past year.


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Greif, Inc. (GEF) : Free Stock Analysis Report
 
RBC Bearings Incorporated (ROLL) : Free Stock Analysis Report
 
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