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RBC Bearings (RBC)
NYSE:RBC
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RBC Bearings
(NYSE:RBC)
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Rating:79Outperform
Price Target:
$596.00
▲(5.40% Upside)
Action:ReiteratedDate:02/06/26
Score is driven primarily by strong financial fundamentals (high margins, robust free cash flow, and a materially de-risked balance sheet) and a positive earnings update with solid growth and guidance. Offsetting factors are a rich valuation (P/E ~61) and somewhat extended technical momentum (RSI ~72, Stoch ~85), which can raise near-term downside risk despite the uptrend.
Positive Factors
High gross margins & profitability
Sustained high gross and operating margins reflect engineering-led pricing power and product complexity in aerospace, defense and industrial niches. These margins support durable operating cash flow, fund reinvestment in R&D/capacity, and sustain competitive advantage over multi-year cycles.
Strong free cash flow generation
Robust FCF and exceptional recent cash conversion create a persistent internal funding source for capex, targeted capacity expansion, and debt reduction. Over 2–6 months this underpins capital allocation flexibility and reduces reliance on external financing for strategic investments.
Deleveraged, flexible balance sheet
Material deleveraging significantly reduces interest and refinancing risk while increasing strategic optionality. A low debt/equity ratio supports opportunistic M&A, continued capacity spend, and quicker normalization of margins if cyclical end markets soften, strengthening long-term resilience.
Negative Factors
Backlog concentrated in A&D
Heavy backlog concentration in aerospace & defense creates revenue concentration risk tied to program timing and government/prime contractor cycles. Industrial demand remains short-cycle, offering less multi-year revenue visibility and increasing sensitivity to A&D cadence and contract extensions.
VACCO integration lumpiness
Integration of VACCO introduces operational and timing variability that can compress margins or mask organic trends as synergies are realized unevenly. Persistent lumpiness complicates forecasting and may delay expected margin convergence in the A&D segment over the medium term.
Operating cash flow timing variability
OCF trailing net income signals working-capital swings that can create quarter-to-quarter liquidity and execution volatility despite strong FCF annually. This timing variability can constrain near-term flexibility for capex, inventory absorption, or accelerated debt paydown during busy production ramps.
RBC Bearings (RBC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$18.07B
Dividend YieldN/A
Average Volume (3M)204.05K
Price to Earnings (P/E)66.5
Beta (1Y)0.92
Revenue Growth8.27%
EPS Growth19.06%
CountryUS
Employees5,302
SectorIndustrials
Sector Strength72
IndustryManufacturing - Tools & Accessories
Share Statistics
EPS (TTM)3.04
Shares Outstanding31,618,961
10 Day Avg. Volume189,731
30 Day Avg. Volume204,048
Financial Highlights & Ratios
PEG Ratio1.98
Price to Book (P/B)3.24
Price to Sales (P/S)6.00
P/FCF Ratio40.25
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue10.54
Enterprise Value/Gross Profit25.02
Enterprise Value/Ebitda36.17
Forecast
1Y Price Target
$586.20Price Target Upside3.67% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)12.16
Revenue Forecast (FY)$1.86B
RBC Bearings Business Overview & Revenue Model
Company DescriptionRBC Bearings Incorporated manufactures and markets engineered precision bearings and components in the United States and internationally. It operates through two segments, Aerospace/Defense and Industrial. The company produces plain bearings with self-lubricating or metal-to-metal designs, including rod end bearings, spherical plain bearings, and journal bearings; roller bearings, such as tapered roller bearings, needle roller bearings, and needle bearing track rollers and cam followers, which are anti-friction products that are used in industrial applications and military aircraft platforms; and ball bearings include high precision aerospace, airframe control, thin section, and industrial ball bearings that utilize high precision ball elements to reduce friction in high-speed applications. It also offers mounted bearing products include mounted ball bearings, mounted roller bearings, and mounted plain bearings; and enclosed gearing product lines, including quantis gearmotor, torque arm, tigear, magnagear & maxum, and controlled start transmission. In addition, the company produces power transmission components include mechanical drive components, couplings, and conveyor components; engineered hydraulics and valves for aircraft and submarine applications, and aerospace and defense aftermarket services; fasteners; precision mechanical components, which are used in various general industrial applications; and machine tool collets that are used for holding circulars or rod-like pieces. It serves automotive, tool holding, agricultural and semiconductor machinery, commercial and defense aerospace, ground defense, construction and mining, oil and natural resource extraction, heavy truck, marine, rail and train, packaging, food and beverage, packaging and canning, wind, and general industrial markets through its direct sales force, as well as a network of industrial and aerospace distributors. The company was founded in 1919 and is headquartered in Oxford, Connecticut.
How the Company Makes MoneyRBC Bearings generates revenue through the sale of its precision bearings and related products to various sectors, including aerospace, defense, and industrial applications. The company's revenue model is primarily based on direct sales to original equipment manufacturers (OEMs) and distributors. Key revenue streams include standard product lines and custom-engineered solutions that cater to specific customer requirements. The company also benefits from long-term contracts and relationships with major aerospace and defense contractors, which provide stability and predictability in revenue. Additionally, RBC Bearings invests in research and development to innovate and expand its product offerings, further enhancing its market position and driving sales growth.
RBC Bearings Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 15, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial performance with notable strengths: double‑digit consolidated revenue growth (17%), robust A&D expansion (41.5%), margin improvement (44.3% consolidated, 45.1% adjusted), substantial EBITDA and EPS growth (~22% and ~30% respectively), strong free cash flow and aggressive debt reduction. Management highlighted a healthy backlog, secular tailwinds in A&D (submarines, missiles, space, commercial aircraft), and improving industrial end‑markets with new products supporting FY27. Key risks include modest industrial growth (3.1%), A&D/ VACCO integration timing and lumpiness, an A&D vs industrial margin gap that will improve gradually, and seasonal/absorption headwinds. Overall, the positives (top‑line momentum, margin recovery, cash generation, debt paydown, and a strong backlog) outweigh the lowlights.Q3-2026 Updates
Positive Updates
Revenue Growth
Net sales of $161.0M, up 17.0% year‑over‑year, driven by strength in aerospace & defense and industrial businesses.
Strong Adjusted EPS and EBITDA Expansion
Adjusted diluted EPS of $3.04 versus $2.34 a year ago, a ~30% improvement (29.9%); adjusted EBITDA of $149.6M versus $122.6M last year, up ~22%.
Robust Free Cash Flow and Cash Conversion
Free cash flow of $99.1M with a cash conversion of 147% (versus $73M and 127% prior-year), enabling capital allocation toward debt reduction.
Debt Reduction and Lower Interest Expense
Paid down $81M of debt in the quarter (and another $67M since quarter end); interest expense of $13.0M, down ~8.5% year‑over‑year; company expects to pay off the remainder of the term loan by November 2026.
Aerospace & Defense Outperformance
Total A&D sales up 41.5% year‑over‑year (commercial aerospace +21.5%, defense +86.2%); A&D growth was 21.7% excluding VACCO; backlog modestly exceeded $2.0B with potential to expand another $0.5B–$1.0B when contract statement-of-work projections are extended.
High Gross Margins and Margin Recovery
Consolidated gross margin 44.3% (45.1% adjusted). Industrial margins were strong at 47.5% (47.4% adjusted); A&D margins improved to 40.1% (42.2% adjusted) and 43.4% excluding VACCO, with management expecting gradual continued A&D margin improvement driven by efficiencies and improved pricing.
Positive Industrial Trends and Product Pipeline
Industrial revenue up 3.1% (distribution +1.5%, OEM +7%). Management cited improving demand in aggregates & cement, food & beverage, warehousing, and a notable semiconductor recovery. New industrial products (including those from the Dodge acquisition) and a new Midwest service center are expected to support FY27 industrial growth.
VACCO Contribution and Integration Progress
VACCO contributed approximately $29M this quarter (near the previously cited ~$30M quarterly run rate) and showed strong margin performance; integration is ongoing and management expressed optimism about space and satellite applications for VACCO products.
Conservative and Positive Q4 Guidance
Guidance for fiscal Q4 revenue of $495M–$550M (growth of 13.1%–15.4% YoY), adjusted gross margin guidance of 45.0%–45.25%, and SG&A of 16.0%–16.25% of sales; management characterized the Q4 outlook as conservative while citing strong positioning and execution.
Moderate CapEx Plan
Planned capital expenditures remain modest and strategic — expected to finish the year at ~3.5%–<4% of sales while funding targeted capacity and tooling additions to support growing A&D demand.
Negative Updates
Relatively Modest Industrial Growth
Industrial revenue rose only 3.1% year‑over‑year (distribution +1.5%, OEM +7%), indicating industrial remains a slower growth area compared with A&D despite improving end‑market signals.
A&D Gross Margin Gap and Gradual Improvement
A&D gross margins (40.1% reported, 42.2% adjusted) remained below industrial margins (47.5%), requiring continued efficiency gains and pricing improvement; management noted the margin recovery will be gradual as benefits flow through.
VACCO Integration Lumpiness and Timing Risk
VACCO results are lumpy quarter‑to‑quarter during integration (about $29M this quarter vs. a $30M run rate), creating some short‑term variability and uncertainty in A&D revenue and margin timing.
Seasonal/Absorption Headwinds in Industrial
Management cited absorption challenges in the third fiscal quarter related to holiday seasonality and fewer earned hours, which can temporarily pressure industrial margins and sequential performance.
Backlog Concentration in A&D
Over 90% of backlog is A&D; industrial orders are short cycle and not reflected in backlog, meaning future industrial revenue is more dependent on near‑term order flow rather than booked multi‑year commitments.
No Full-Year Guidance and Conservative Near-Term Outlook
Company did not provide full‑year guidance and described Q4 guidance as conservative, which may indicate management caution around near‑term execution and market variability despite optimistic messaging.
Company Guidance
The company guided Q4 revenues of $495–$550 million (year‑over‑year growth of +13.1% to +15.4%), adjusted gross margin of 45.0%–45.25%, and SG&A of 16.0%–16.25% of sales. For context, Q3 results included net sales of $161 million (+17% YoY), adjusted gross margin 45.1% (reported 44.3%), adjusted diluted EPS $3.04 (+29.9% YoY), adjusted EBITDA $149.6 million (32.4% of sales, +22% YoY), free cash flow $99.1 million (147% cash conversion), interest expense $13 million (‑8.5% YoY), and $81 million of debt paid down in the quarter (plus $67 million since quarter end); management reiterated a capital‑allocation focus on deleveraging (expecting to retire the term loan by November 2026), a full‑year CapEx run‑rate of roughly 3.5%–<4% of sales, and noted backlog slightly above $2.0 billion (A&D >90% of backlog) with a potential incremental $0.5–$1.0 billion if contract scopes are extended.RBC Bearings Financial Statement Overview
Summary
Strong profitability (TTM gross margin ~44%, EBIT margin ~16.6%, net margin ~15%) and robust cash generation (TTM FCF ~$330M, up ~8.4%). Balance sheet strength is a key positive, with major deleveraging (debt down to ~$0.35B TTM; debt/equity ~0.11x). Main watch item: TTM operating cash flow trails net income (~0.61x), suggesting working-capital/timing variability.Income Statement
Profitability is strong and improving: TTM (Trailing-Twelve-Months) gross margin is ~44% with solid operating profitability (EBIT margin ~16.6%) and net margin ~15%. Revenue has grown meaningfully over the last several years (from ~$0.61B in 2021 to ~$1.79B TTM), though recent growth is more moderate (TTM revenue growth ~3.9%). A watch item is some compression in operating margin versus the 2024–2025 annual levels, even as overall earnings remain healthy.84
Very Positive
Balance Sheet
Leverage has improved dramatically, strengthening financial flexibility: total debt fell from ~$1.79B (2022) to ~$0.35B TTM, and debt relative to equity is very low (~0.11x TTM) versus elevated levels in 2022–2024. Equity has expanded alongside assets, supporting a sturdier capital base. Returns on equity are steady but not exceptional (mid-to-high single digits, ~8.5% TTM), suggesting profitability is solid but not yet at peak efficiency.88
Very Positive
Cash Flow
Cash generation is healthy with good conversion: TTM operating cash flow is ~$400M and free cash flow is ~$330M, with free cash flow up ~8.4% TTM. Free cash flow runs at a high share of net income (about ~0.83x TTM), indicating earnings quality is generally sound. The main weakness is that operating cash flow is below net income in TTM (about ~0.61x), implying working-capital or timing headwinds that could create quarter-to-quarter variability.82
Very Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.79B | 1.64B | 1.56B | 1.47B | 942.90M | 609.00M |
| Gross Profit | 754.40M | 726.10M | 670.50M | 604.80M | 357.10M | 234.10M |
| EBITDA | 521.90M | 491.70M | 459.80M | 401.80M | 185.70M | 146.80M |
| Net Income | 268.60M | 246.20M | 209.90M | 166.70M | 54.70M | 90.10M |
Balance Sheet | ||||||
| Total Assets | 5.14B | 4.69B | 4.68B | 4.69B | 4.85B | 1.43B |
| Cash, Cash Equivalents and Short-Term Investments | 107.60M | 36.80M | 63.50M | 65.40M | 182.86M | 241.34M |
| Total Debt | 1.11B | 1.03B | 1.29B | 1.49B | 1.78B | 51.81M |
| Total Liabilities | 1.88B | 1.65B | 1.93B | 2.15B | 2.47B | 202.16M |
| Stockholders Equity | 3.26B | 3.03B | 2.75B | 2.54B | 2.37B | 1.23B |
Cash Flow | ||||||
| Free Cash Flow | 330.10M | 243.80M | 241.50M | 178.60M | 150.50M | 140.60M |
| Operating Cash Flow | 399.70M | 293.60M | 274.70M | 220.60M | 180.30M | 152.40M |
| Investing Cash Flow | -344.60M | -49.80M | -52.20M | -14.00M | -2.85B | -101.50M |
| Financing Cash Flow | -7.30M | -270.40M | -223.50M | -322.80M | 2.70B | -3.40M |
RBC Bearings Technical Analysis
Positive
565.44
Price Trends
500.30
Positive
458.24
Positive
420.75
Positive
Market Momentum
19.31
Negative
77.63
Negative
86.14
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RBC, the sentiment is Positive. The current price of 565.44 is above the 20-day moving average (MA) of 539.43, above the 50-day MA of 500.30, and above the 200-day MA of 420.75, indicating a bullish trend. The MACD of 19.31 indicates Negative momentum. The RSI at 77.63 is Negative, neither overbought nor oversold. The STOCH value of 86.14 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RBC.
RBC Bearings Risk Analysis
RBC Bearings disclosed 10 risk factors in its most recent earnings report. RBC Bearings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
RBC Bearings Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $18.07B | 66.50 | 8.66% | ― | 8.27% | 19.06% | |
78 Outperform | $20.09B | 20.17 | 17.96% | 2.52% | 0.24% | -1.85% | |
72 Outperform | $15.68B | 30.58 | 37.22% | 1.22% | 3.27% | 10.89% | |
72 Outperform | $7.62B | 26.67 | 9.60% | 1.61% | -1.01% | -12.13% | |
65 Neutral | $3.06B | 28.06 | 8.70% | 2.74% | -2.63% | -4.46% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $13.82B | 33.73 | 4.52% | 4.42% | -1.40% | ― |
* Industrials Sector Average
RBC
RBC Bearings
565.44
207.28
57.87%
KMT
Kennametal
40.03
18.44
85.44%
LECO
Lincoln Electric Holdings
287.42
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39.83%
SNA
Snap-on
386.46
56.38
17.08%
SWK
Stanley Black & Decker
85.26
1.74
2.08%
TKR
Timken Company
107.69
28.88
36.65%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.