RBC Bearings trades at $323.69 and has moved in lockstep with the market. Its shares have returned 10.7% over the last six months while the S&P 500 has gained 9.1%.

Is RBC a buy right now? Find out in our full research report, it’s free.

Why Does RBC Bearings Spark Debate?

With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE:RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.

Two Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Thankfully, RBC Bearings’s 17.3% annualized revenue growth over the last five years was incredible. Its growth surpassed the average industrials company and shows its offerings resonate with customers.

2. EPS Moving Up Steadily

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

RBC Bearings’s EPS grew at a decent 8.6% compounded annual growth rate over the last five years. This performance was better than most industrials businesses.

One Reason to be Careful:

Free Cash Flow Margin Dropping

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, RBC Bearings’s margin dropped by 5.3 percentage points over the last five years. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. If the longer-term trend returns, it could signal higher capital intensity. RBC Bearings’s free cash flow margin for the trailing 12 months was 16.1%.

Final Judgment

RBC Bearings’s positive characteristics outweigh the negatives, but at $323.69 per share (or 32× forward price-to-earnings), is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

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