RBC Bearings Inc.ROLL

Morningstar Rating

Stock Research and Analysis

by Min Ye

Thanks to its specialized antifriction products, RBC Bearings is poised to benefit from long-term demand in aerospace and alternative energy markets, despite near-term market weakness.

RBC focuses on highly technical or regulated bearing products. Read more

Bulls Say

About one fourth of RBC's revenue is derived from products for which it is the sole supplier. In general, RBC is the number-one or -two supplier for about two thirds of its products.

RBC has strong customer relationships (20 years or more for many), has a large installed product base with recurring aftermarket revenue streams, and is approved for more than 32,000 bearings applications.

Even when defense spending declines, maintenance and repair demand from the military tends to remain relatively stable.

Though most of its sales are in the United States, RBC is pursuing many international aerospace and military opportunities through sales offices in markets like Germany, England, and Switzerland. Read more

Bears Say

RBC works with industrial manufacturers like Applied Materials AMAT, Caterpillar CAT, General Electric GE, and Boeing BA, and while most of these relationships are strong, the firm runs the risk of its profits being squeezed by these larger, more powerful entities.

Industrial markets have weakened substantially in light of global economic slowdown. These markets could remain weak in the near term, squeezing RBC's profitability.

The company runs the risk of overpaying for targets as acquisition is part of its growth strategy. Read more

Strategy

We think RBC's multiprong strategy reinforces its narrow moat. The company focuses on developing bearing solutions to strengthen customer relationships, gain share in existing markets, and expand into Read more

Management

The leadership of CEO Michael J. Hartnett is critical to the success of RBC Bearings. A Ph.D. in applied mechanics and an industry veteran, Hartnett owns numerous patents and made various contributions to tribology, the study of friction. Hartnett bought Read more

Profile

Connecticut-based RBC Bearings manufactures and distributes highly specialized plain, roller, and ball bearings. The company operates 20 facilities in four countries and Read more

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