Latest news with #RBCBearings
Yahoo
4 days ago
- Business
- Yahoo
Market's 'hidden gem': Mid-cap stocks offer 'best of both worlds'
Mid-cap stocks are an area of opportunity that investors often overlook, Alger executive vice president and portfolio manager Amy Zhang tells Wealth host Brad Smith. Watch the video above to hear more. To watch more expert insights and analysis on the latest market action, check out more Wealth here. stocks, rising after the May CPI report shows inflation rising at a slower pace here. My next guest says that mid caps are overlooked by Wall Street, making them fertile grounds for active stock pickers. Joining me now, we've got Amy Zhang, who is the Alger executive vice president and portfolio manager. Good to have you here with us this morning. Where are you seeing opportunity in mid caps right now? Good morning, Brent. Thank you for having me on. Yes, I mean, happy, you know, I think it's really a hidden gem. Um, you know, has the best of both worlds compared to small cap and large cap, you know, has the discovery value similar to small cap is during a not very well covered by the street and a very inefficient. Uh, but it's also has similar financial quality compared to large cap and similar liquidity. So it really makes it a very fertile ground for active management and I still think and the you I think investors typically are still under allocated in the mid cap space. How are you evaluating small and mid caps amid what we're watching play out in the bond market, knowing that they're more dependent on the fluctuations in the cost of capital? Well, uh some of them do. Uh you're absolutely right, but you know, at Alger we're stock pickers. So really we focus on bottom bottom up um analysis and really we favor companies has very strong um balance sheet and um very um strong casual generating capabilities so they can fund their own growth. Okay, so as you're picking names, who are those names that rise to the top of the the list? Well, one of our high conviction names um also um been a long-term shareholder we've invested in RBC Bearings since 2020. Um it's a you know, at at at Alger as stock pickers we invested in exceptional small make companies to have the potential to become exceptional large companies and RBC really exemplify other characteristics we look for in a um exceptional um, you know, company. Um the company, you know, it's a market leader in highly engineered precision bearings for commercial aerospace, defense and industrial markets. Um those are very, you know, mission critical bearings, are highly regulated, require very stringent performance requirements and those are really, you know, very uh critically important to manufacture and operations of, you know, aircraft, mechanical system, um and they reduce wear tear, energy loss, um and facility, you know, power transmission, control, pressure and flow. So it's a very special um uh, you know, the company also has very special company but they also have the best uh breadth and the depth of a company. Um and very diversified in their markets, um but also has, you know, they are um major vast majority of their products are solely source. So it's very hard to replace them. That give them a very strong uh competitive mode. So in today's world, people worry about, you know, inflation, uh and a recession and we always say we want to invest in like a motorboat, like, you know, RBC, they have their own idiosyncratic drivers, their pricing power. Um specifically, notably the biggest, you know, the fastest growing segment is commercial aerospace, which, you know, we think it has a very strong uh tailwind for multi-year cyclical recovery. Number one is because, you know, that industry saw a very steep um, you know, downturn in 2020 and 21 due to COVID travel restrictions. But also, um, you know, with the additional headwind including the grounding of Boeing 737 max, uh and industry wide supply chain constraints. But all those issues are resolved now. So we think you know, RBC is very well positioned to benefit from the multi-year, probably 10 plus year of cyclical recovery. What what should investors be keeping tabs on with regard to tariff policy as it flows through to small and mid cap names that you're tracking? That's excellent question. I think company we should focus on company can control their own destiny like RBC bearings because you want a company have differentiated products, that pricing power, so they can pass, you know, because the product is so mission critical, they can pass, you know, most of their tariff, uh, you know, that to if some of all of them, right, to their customers. So I think so we really that's why we really focus on company have very strong um competitive advantage, um and have pricing power. Amy, good to see you. Thanks for joining us again. Yeah, thank you for having me. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
RBC Bearings Bolsters Aerospace and Defense Segment with VACCO Industries Acquisition
RBC Bearings Incorporated (NYSE:RBC) has set its sights on emerging opportunities in the secularly growing space and submarine channels. On May 20, the company confirmed the inking of an agreement to acquire VACCO Industries from ESCO Technologies for $310 million. With the acquisition, it gained access to a prominent manufacturer of valves, manifolds, regulators, and other precision components and systems for naval defense channels. The hand of a successful entrepreneur signing a contract, symbolizing a productive acquisition. Once the deal closes, VACCO will be integrated into RBC Bearings' Aerospace and Defense segment. The acquisition comes on RBC Bearings, delivering impressive fourth-quarter and full-year results for fiscal 2025. Revenues in the quarter were up 5.8% year-over-year at $437.7 million. On the other hand, adjusted earnings came in at $2.83 a share, beating consensus estimates of $2.68 and up 14.6% year over year. Amid focus on organic growth, RBC Bearings expects net sales to be approximately $424 million and $434 million in Q1 FY26, representing year-over-year growth of between 4.4% and 6.8%. Truist Securities has reiterated a Buy rating on the stock and hiked the stock's price target to $405 from $375, buoyed by the company's track record in outperforming the market. While we acknowledge the potential of RBC Bearings Incorporated (NYSE:RBC) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than RBC and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
RBC Bearings to Acquire VACCO Industries & Boost Product Portfolio
RBC Bearings Incorporated RBC recently announced that it has signed a definitive deal with ESCO Technologies Inc. ESE to acquire VACCO Industries for about $310 million in cash. RBC is expected to fund the transaction through borrowings under its current credit agreement and cash on shares were down 1% yesterday to eventually close the trading session at $ in South El Monte, CA, VACCO is engaged in producing valves, filters, regulators and other precision components and subsystems for the space and naval defense sectors. The firm's innovative engineered solutions are designed to support critical missions for customers across the defense, space and commercial markets. VACCO generated revenues of roughly $118 million in the trailing 12 months ended March 31, 2025. The latest buyout is in sync with RBC Bearings' policy of acquiring companies to strengthen its business and product portfolio. The inclusion of VACCO's expertise in engineered valves, regulators and manifolds, supported by its strong designing, engineering and production capabilities, will enable RBC to expand its customer offerings in the defense, space and commercial markets. It will incorporate VACCO into its Aerospace and Defense expects the transaction to be completed this summer, conditioned on the fulfillment of certain customary closing conditions. RBC Bearings, with a $11.8 billion market capitalization, currently carries a Zacks Rank #4 (Sell). The company is grappling with rising operating costs and expenses. In first-quarter 2025, its cost of sales rose 3.8% year over year, while selling, general and administrative expenses increased 12% year over year. However, strength in its Aerospace/Defense segment, along with recovery in the Industrial unit, bodes well. Image Source: Zacks Investment Research The company's shares have gained 4.4% against the industry's decline of 0.8% in the past three Zacks Consensus Estimate for RBC's current-year earnings has declined 0.9% over the last 60 days. A couple of better-ranked stocks from the same space are discussed Gorman-Rupp Company GRC currently carries a Zacks Rank #2 (Buy). GRC delivered a trailing four-quarter average earnings surprise of 2.4%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks the past 60 days, the Zacks Consensus Estimate for Gorman-Rupp's 2025 earnings has increased 0.5%.Broadwind Energy BWEN currently carries a Zacks Rank of 2. BWEN delivered a trailing four-quarter average earnings surprise of 61.1%. In the past 60 days, the consensus estimate for Broadwind Energy's 2025 earnings has increased 33.2%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RBC Bearings Incorporated (RBC) : Free Stock Analysis Report ESCO Technologies Inc. (ESE) : Free Stock Analysis Report Gorman-Rupp Company (The) (GRC) : Free Stock Analysis Report Broadwind Energy, Inc. (BWEN) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
20-05-2025
- Automotive
- CNBC
This industrial stock you likely have never heard of is a 'high-quality compounder,' says Morgan Stanley
RBC Bearings is poised for further gains as defense demand grows and ample room remains for further acquisitions, according to Morgan Stanley. Analyst Kristine Liwag reiterated her overweight rating and increased her price target on the stock by $25 to $415. That suggests more than 10% potential upside for the stock, which has already popped more than 26% this year. "Demand for RBC products remains strong across Industrials and Aerospace & Defense end markets," Liwag wrote in a note to clients. "We continue to view RBC Bearings as a high-quality industrials compounder with attractive growth and margin expansion potential." Liwag's new target comes after RBC on Friday reported mixed fiscal fourth-quarter results. The bearings and engineered components maker beat on earnings but fell short of revenue expectations, according to FactSet. RBC boasted strong growth in its aerospace and defense businesses, reporting a year-over-year net sales increase of 10.6% for the fourth quarter and 14.1% for fiscal 2025. It's seen strength in areas such as fixed-wing aircraft, missiles and guided munitions and space, according to the analysts. Liwag pointed out that RBC management expects strong demand to continue in fiscal year 2026 given expectations for aerospace to be up at least 15% and defense to be up by mid-to-high single digit percentages. Another part of Liwag's core investment thesis is that RBC has reduced its debt, and she expects it to fall even further by the end of fiscal year 2027. The acquisition of Dodge Mechanical Power Transmission unit has been "game changer" for RBC, she said, explaining that the business generates strong cash flow, which can be funneled to reduce debt. Dodge also has a recurring industrials business and better manufacturing technology from its expertise in factory automation, she said. "RBC's ongoing success is driven by multiple factors, with ongoing synergies from the Dodge acquisition being the largest contributor," Liwag wrote in the note. "Given RBC's improved leverage, we continue to see the potential for accretive M & A following its successful acquisition and integration of Dodge." Analysts polled by LSEG have an average price target on Boeing shares that indicates about 3% potential upside. Four of the seven analysts covering the stock have a strong buy or buy rating, while three share a hold rating.
Yahoo
17-05-2025
- Business
- Yahoo
RBC Bearings Inc (RBC) Q4 2025 Earnings Call Highlights: Strong Aerospace Growth and Strategic ...
Revenue: $438 million, a 5.8% increase year-over-year. Gross Margin: 44.2%, up from 43.1% last year. Adjusted Diluted EPS: $2.83, up 14.6% from $2.47. Aerospace and Defense Sales Growth: 10.6% year-over-year. Industrial Segment Growth: 3.3% year-over-year. Adjusted EBITDA: $139.8 million, up 7.4% year-over-year. Adjusted EBITDA Margin: 31.9%, up 50 basis points year-over-year. Interest Expense: $12.8 million, down 31.8% year-over-year. Free Cash Flow: $55 million with a conversion rate of 76%. Debt Repayment: $82 million in the quarter, $275 million for the fiscal year. Net Leverage: Reduced to 1.7 turns. Guidance for Q1 Revenue: $424 million to $434 million, growth of 4.4% to 6.8%. Projected Gross Margins for Q1: 44.25% to 44.75%. Warning! GuruFocus has detected 8 Warning Sign with RBC. Release Date: May 16, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. RBC Bearings Inc (NYSE:RBC) reported a 5.8% increase in fourth-quarter sales, reaching $438 million, driven by strong performance in the aerospace and defense (A&D) segment and industrial businesses. Consolidated gross margin improved to 44.2% from 43.1% the previous year, reflecting effective cost management and operational efficiency. Adjusted diluted EPS increased by 14.6% to $2.83 per share, showcasing strong profitability despite industry challenges. The company achieved a 10.6% year-over-year growth in total A&D sales, with commercial aerospace up 11.6% and defense up 8.2%. RBC Bearings Inc (NYSE:RBC) reduced its net leverage to 1.7 turns by allocating $275 million to debt repayment in fiscal 2025, enhancing its financial flexibility for future M&A opportunities. The industrial segment's growth was modest at 3.3% year-over-year, indicating potential challenges in this sector compared to A&D. Free cash flow conversion decreased to 76% from 113% the previous year, primarily due to timing around accounts receivable. The company faces capacity constraints in some A&D plants, requiring ongoing investments in labor, machinery, and capital to meet demand. RBC Bearings Inc (NYSE:RBC) anticipates minimal tariff pressure but acknowledges potential long-term impacts depending on tariff levels. The industrial economy has experienced two consecutive years of contraction, posing challenges for sustained growth in this segment. Q: With Boeing's production rates improving, how much bigger could RBC's commercial aerospace OE business become, and what is the margin opportunity when full production rates are achieved? A: Michael Hartnett, CEO, noted that Boeing is expected to reach a production rate of 38 planes per month soon, with potential to reach the upper 40s by calendar 2026. He indicated that RBC's revenue could significantly increase with higher production rates, but specific figures would require further calculation. Q: Can you provide more detail on the initiatives driving growth in the industrial segment, and how sustainable is this growth compared to peers? A: Michael Hartnett, CEO, explained that improvements in service levels and production capacity at Dodge, along with the introduction of new products, have driven growth. These initiatives have positioned RBC to outperform peers, and the outlook remains positive with ongoing efforts to capture market share. Q: What are the gross margins by segment for the quarter, and is there potential for further margin expansion, particularly in aerospace and defense? A: Robert Sullivan, CFO, reported industrial gross margins at 45.7% and aerospace and defense margins at 41.5%. He noted that there is potential for further expansion, particularly in aerospace and defense, with expected contract renewals and increased volumes contributing to margin improvement. Q: How is RBC managing capacity to support anticipated growth in aerospace and defense, and what are the plans for capital expenditure? A: Michael Hartnett, CEO, stated that RBC is addressing capacity constraints by adding labor, hours, and machinery, and relocating equipment between plants. This effort is expected to continue over the next two years. Robert Sullivan, CFO, mentioned that CapEx is projected to be 3% to 3.5% of sales. Q: What is the outlook for M&A activity, and what types of assets is RBC interested in acquiring? A: Michael Hartnett, CEO, indicated that RBC is actively exploring M&A opportunities, focusing on companies that align with RBC's customer base and manufacturing capabilities. The company is selective and looks for synergies, with a strong balance sheet ready to support potential acquisitions. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
