RBC Bearings Gains From Business Strength Amid Persisting Headwinds

RBC Bearings Incorporated RBC is gaining from the solid performance of the Aerospace/Defense segment. Strength in the commercial aerospace market, driven by strong growth in orders from the OEM (original equipment manufacturer) and the aftermarket verticals, is driving the Aerospace/Defense segment. The robust backlog level, along with the company’s strong execution on incremental orders in the commercial aerospace market, is expected to be beneficial for the segment. An increase in demand for the company’s bearings and engineered component products in the defense market, supported by growth in marine and missile applications orders, will also continue to augur well for the segment in the quarters ahead.

RBC is also benefiting from strength in the Industrial segment. Stable demand for its highly engineered bearings and precision components in food & beverage, grain, aggregate & cement, parcel & baggage and warehousing markets bodes well.

RBC Bearings solidified its product portfolio and leveraged business opportunities through asset additions. In July 2025, RBC acquired VACCO Industries from ESCO Technologies for about $275 million in cash. The inclusion of VACCO’s expertise in engineered valves, regulators and manifolds, supported by its strong designing, engineering and production capabilities, will enable the company to expand its customer offerings in the defense, space and commercial markets. In the fiscal second quarter of fiscal 2026 (ended September 2025), VACCO contributed $24.7 million in net sales to the Aerospace & Defense segment.

The company is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. Though it did not pay any dividend or repurchase shares in the first six months of fiscal 2026, in fiscal 2025, RBC paid preferred stock dividends of $17.2 million and repurchased shares for $9.5 million.

Price Performance of RBC

In the past year, this current Zacks Rank #3 (Hold) company’s shares have risen 52.7% compared with the industry’s 9.5% growth.

However, weak refinery demand is affecting the oil and gas end markets, which remains a persistent concern for RBC. Also, softness in the semiconductor equipment market due to a slowdown in the overall manufacturing sector might impede the company’s growth in the near term.

RBC Bearings is currently dealing with the rising cost of sales. Increasing raw material costs are pushing up the cost of sales. In the first six months of fiscal 2026, the company’s cost of sales and SG&A expenses increased 11% and 10.4%, respectively. High costs and expenses, if uncontrolled, may adversely impact the company’s margins and profitability in the quarters ahead.

Stocks to Consider

Some better-ranked companies are discussed below.

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PH delivered a trailing four-quarter average earnings surprise of 6.2%. In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2026 earnings has increased 3.8%.

Helios Technologies, Inc. HLIO presently sports a Zacks Rank of 1. HLIO delivered a trailing four-quarter average earnings surprise of 16.8%.

In the past 60 days, the consensus estimate for Helios’ 2025 earnings has increased 1.7%.

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In the past 60 days, the consensus estimate for Watts Water’s 2025 earnings has increased 4.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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