Shares of RBC Bearings Incorporated ROLL reached a new 52-week high of $77.81 during its trading session on Apr 2. This apex improved upon the last 52-week high of $77.66 hit on Mar 31.
RBC Bearings closed the session at $76.41, reflecting a solid year-to-date return of 18.4%. The trading volume for the session was 0.22 million shares. Earnings estimate revisions for fiscal 2016, along with an expected earnings growth rate of 11.8% for the next 5 years, indicate further upward potential for this machinery company.
Growth Drivers
RBC Bearings recently signed an agreement to acquire Dover Corporation’s DOV Sargent Aerospace & Defense business for $500 million. The acquisition is expected to contribute 25–35 cents per share to the company’s earnings in the first year, and add $7.5 million of synergies over the next five years.
Also, the company holds a sound earnings track record, with better-than-expected performance in three of four trailing quarters and a positive average earnings surprise of 1.12%. In third-quarter fiscal 2015 (ended Dec 31, 2014), earnings came in at 62 cents per share, up 1.6% from the Zacks Consensus Estimate of 61 cents. Also, the bottom line increased 12.7% year over year.
Net sales grew 5.7% year over year on the back of a 13.9% rise in the company’s industrial products sales, primarily driven by booming demand in the global oil & gas, construction and general industrial market. Exiting the quarter, backlog stood at $217.5 million. Adjusted gross margin improved 90 basis points to 39.2%.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for RBC Bearings edged up 0.6% to $3.36 for fiscal 2016. This estimate represents year-over-year growth of 23.3%.
With a market capitalization of $1.8 billion, RBC Bearings currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the machinery industry include ESCO Technologies Inc. ESE and Astec Industries, Inc. ASTE. While ESCO Technologies sports a Zacks Rank #1 (Strong Buy), Astec Industries carries a Zacks Rank #2 (Buy).
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