RBC Bearings Incorporated RBC stands to benefit from strength across its businesses, synergies from acquisitions and shareholder-friendly policies. The company remains focused on investing in growth opportunities and strengthening its long-term market position.

RBC, which has a market capitalization of $10.5 billion, currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the firm for a while now.

End-Market Strength: RBC Bearings is benefiting from the strong performance of the Aerospace/Defense segment. Strength in the commercial aerospace market, driven by strong growth in orders from the OEM (original equipment manufacturer) and the aftermarket verticals, is driving the segment (revenues up 18% year over year in the first six months of fiscal 2025). The robust backlog level, along with the company’s strong execution on incremental orders in the commercial aerospace market, is expected to be beneficial for the segment.

An increase in demand for the company’s bearings and engineered component products in the defense market, supported by growth in marine, helicopter and missile applications orders, will likely augur well for the Aerospace/Defense segment in the quarters ahead. For the third quarter of fiscal 2025 (ending December 2024), RBC Bearings anticipates net sales to be in the range of $390-$400 million, indicating year-over-year increase of 1-3.6%.

Acquisition Benefits: The company has been strengthening its business through acquisitions. It acquired Carson City, NV-based precision bearings manufacturer Specline, Inc. in August 2023. The transaction was valued at $18.7 million. Specline’s unique bearing and manufacturing processes expanded RBC Bearings’ aerospace product offerings and boosted its production capacity.

Price Performance

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Over the past year, its shares have gained 25.6% compared with the industry’s 23.8% growth.

Strong Product Portfolio: RBC is poised to benefit from its well-diversified product portfolio. Some notable products introduced by the company are spherical bearings, sealed bearings, rod ends, clamping collars, keyless locking assemblies, precision dowel pins and rollers.

Also, its investments in manufacturing processes are anticipated to be beneficial over the long term. It is worth noting that in early 2024, the company completed building a 100,000-square-foot plant in Takata, Mexico to increase its production capacity.

Shareholder-Friendly Policies: RBC Bearings remains committed to increasing shareholders’ value through dividend payments and share repurchases. In the first six months of fiscal 2025, it paid dividends of $11.4 million, flat year over year, and repurchased shares for $8.4 million, up 20% year over year.

Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2025 (ending March 2025) earnings has increased 0.5%. Also, the same for fiscal 2026 (ending March 2026) has been revised upward 0.7%.

Other Key Picks

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for GHM’s fiscal 2025 earnings has increased 8.4%.

Applied Industrial Technologies AIT presently carries a Zacks Rank of 2. AIT delivered a trailing four-quarter average earnings surprise of 5%.

In the past 60 days, the consensus estimate for AIT’s 2024 earnings has inched up 0.7%.

Kadant Inc. KAI currently carries a Zacks Rank of 2. KAI delivered a trailing four-quarter average earnings surprise of 17.2%.

In the past 60 days, the consensus estimate for Kadant’s 2024 earnings has increased 1.8%.

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