Donald Trump’s market-friendly policies, steady U.S. job data, improving consumer confidence and an upbeat U.S. gross domestic product have been aiding the broader market in moving north. In fact, all major benchmarks, including S&P 500, Nasdaq and Dow, registered post-election gains of 6.53%, 6.02% and 9.21%, respectively.
Pro-growth policies of Trump, such as slashing tax rates and raising government spending, would likely enhance infrastructure and industrial spending in the U.S. These initiatives are also anticipated to bolster sales of the country’s industrial products’ companies.
Among the numerous potential gainers, adding RBC Bearings Incorporated ROLL to your portfolio would likely be a promising move.
Post release of better-than-expected second-quarter fiscal 2017 (Nov 3, 2016) results, this Zacks Rank #1 (Strong Buy) company’s shares recorded a return of 33.33% – outperforming 13.06% returns provided by the Zacks categorized Machinery-General Industrial industry.
Reasons for the Solid Run
Revenue Growth: Over the last five years (fiscal 2012-2016) RBC Bearings’ revenues increased 64%. Notably, the company’s revenues in the fiscal second quarter 2017 increased 3.5% year over year, on the back of robust industrial-end as well as aerospace markets’ business. Management estimates to generate revenues within the range of $146–$148 million in third-quarter fiscal 2017.
Over the long run, the company believes that higher demand for commercial aerospace original equipment manufacturing products would likely drive revenues for its aerospace business. In addition, increased sales of mining, semiconductor and marine activities would augment sales of industrial-end market’s trade.
Notably, the stock projected revenue growth for (F1/F0) and (F2/F1) currently stands at 4.86% and 5.82%, respectively.
Earnings per Share Growth: RBC Bearings recorded an average earnings surprise of 1.60%, over the last four quarters, beating estimates on three occasions. In the quarters ahead, the company expects to report higher earnings, benefiting from increasing sales and reduced costs.
Inorganic Schemes: RBC Bearings tries to boost its fundamentals on the back of meaningful acquisitions. For instance, the strategic buyout of Sargent Aerospace & Defense business (Apr 2015) has been driving the company’s revenues and profitability in recent quarters. The company anticipates accruing synergies of almost $7.5 million from the deal by the end of 2020.
Upward Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate for RBC Bearings moved up 5.1% to $3.74 for fiscal 2018. The upward earnings estimate revision indicates positive sentiments and substantiates the Zacks Rank #1 for this stock.
The stock’s projected earnings per share (‘EPS’) growth for (F1/F0) and (F2/F1) currently stands at 2.23% and 16.59%, respectively.
Stocks to Consider
Some other favorably placed stocks from the same space are listed below:
Actuant Corporation ATU currently flaunts a Zacks Rank #1 and has an average earnings surprise of 11.47% for the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alarm.Com Holdings, Inc. ALRM currently carries a Zacks Rank #2 (Buy) and has a whopping average earnings surprise of 165.56% for the trailing four quarters.
ABB Ltd. ABB presently holds a Zacks Rank #2 and has an average earnings surprise of 23.50% for the last four quarters.
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