RBC Bearings (NYSE:RBC) Exceeds Q3 Expectations

Bearings manufacturer RBC Bearings (NYSE:RBC) announced better-than-expected revenue in Q3 CY2025, with sales up 14.4% year on year to $455.3 million. The company expects next quarter’s revenue to be around $458 million, close to analysts’ estimates. Its non-GAAP profit of $2.88 per share was 5.3% above analysts’ consensus estimates.

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Dr. Michael J. Hartnett, Chairman and Chief Executive Officer, stated, “Our performance during the second quarter achieved a very high standard as demand from many of our core markets reached unprecedented levels. We were well prepared to support the generational expansion taking place in these aerospace and defense markets and are pleased to recognize the outstanding performance reached by our factories and offices. Clearly, we have entered a unique period in our business cycle and look forward to delivering a record year to our shareholders.”

Company Overview

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.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, RBC Bearings’s 21% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. RBC Bearings’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 6.5% over the last two years was well below its five-year trend.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Diversified Industrials and Aerospace and Defense, which are 43.7% and 56.3% of revenue. Over the last two years, RBC Bearings’s Diversified Industrials revenue (general industrial equipment) averaged 2% year-on-year declines. On the other hand, its Aerospace and Defense revenue (aircraft equipment, radar, missiles) averaged 23.3% growth.

This quarter, RBC Bearings reported year-on-year revenue growth of 14.4%, and its $455.3 million of revenue exceeded Wall Street’s estimates by 1.1%. Company management is currently guiding for a 16.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 13.3% over the next 12 months, an improvement versus the last two years. This projection is commendable and suggests its newer products and services will spur better top-line performance.

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Operating Margin

RBC Bearings has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 20.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, RBC Bearings’s operating margin rose by 6 percentage points over the last five years, as its sales growth gave it immense operating leverage.

In Q3, RBC Bearings generated an operating margin profit margin of 21.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

RBC Bearings’s astounding 19.7% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For RBC Bearings, its two-year annual EPS growth of 16.2% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, RBC Bearings reported adjusted EPS of $2.88, up from $2.29 in the same quarter last year. This print beat analysts’ estimates by 5.3%. Over the next 12 months, Wall Street expects RBC Bearings’s full-year EPS of $10.89 to grow 14.2%.

Key Takeaways from RBC Bearings’s Q3 Results

We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its . Overall, we think this was still a solid quarter with some key areas of upside. The stock remained flat at $406.45 immediately after reporting.

Big picture, is RBC Bearings a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.