RBC Bearings is the IBD Stock of The Day for Wednesday. The company's earnings and revenue are wheeling right along after acquiring a major competitor last November. And RBC stock is nearing another buy point after breaking out in August.
The Oxford, Conn.-based company specializes in the bearings and tiny parts for machines, aircraft and heavy-duty industrial equipment. Although the parts tend to be quite small, they play crucial roles in reducing damage, wear and energy loss caused by friction.
RBC Bearings revenue growth accelerated the past five quarters and earnings saw a dramatic uptick the last two quarters.
RBC acquired rival Asea Brown Boveri's (ABB) DODGE Mechanical Power Transmission business for $2.9 billion in cash last November. The move doubled RBC's revenue. DODGE generated $617 million sales for the 12 months ending in July 2021. And RBC Bearings reported $607 million in revenue for its fiscal 2021.
For its most recent quarterly results on Nov. 10, RBC reported earnings leapt 66% to $1.93 per share and revenue skyrocketed 129% to $369 million. That topped analyst estimates of $1.81 per share on $361 million in revenue.
And despite having fewer production days during the current Q3 quarter, RBC expects a strong 30% to 35% increase in sales to range between $348 million and $360 million.
RBC Stock Analysis
RBC Bearings is IBD's top-ranked stock in the metal processing and fabrication industry group, according to the IBD Stock Checkup. Shares traded on Wednesday near the highest level in their 17-year history. RBC Bearings went public in 2005.
RBC stock hit an all-time high near $265 in mid-August after breaking out from a yearlong cup base.
MarketSmith indicates RBC stock has a 256.39 buy point for its cup-with-handle base. Shares already broke above the downward trend line of the handle, which presents an early buying opportunity.
RBC stock is about 2% above its 21-day exponential moving average. And shares are yet extended from the 50-day moving average, which is starting to turn up. RBC's relative strength line is near its 52-week highs from the beginning of the month.
RBC stock has a perfect 99 Composite Rating, which combines a number of technical indicators into one easy to read score. Its recent strong earnings growth earns the company an 88 EPS Rating. And RBC stock has a 94 RS Rating, indicating superior performance against its peers.
The company does show a debt-to-equity level of 71%. That's not the highest in the group, but is well above the 44% average of the other four industry group leaders.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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