3 Reasons Growth Investors Will Love RBC Bearings

<p style="text-align: center;"><img src="/ueditor/php/upload/image/20230216/1676536346123768.png" title="1676536346123768.png" alt="3.png"/></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market&#39;s attention and produce exceptional returns. However, it isn&#39;t easy to find a great growth stock.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company&#39;s growth story is over or nearing its end, betting on it could lead to significant loss.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the&nbsp;Zacks Style Scores&nbsp;system), which looks beyond the traditional growth attributes to analyze a company&#39;s real growth prospects.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">RBC Bearings (RBC) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">While there are numerous reasons why the stock of this maker of <a href="https://www.wswbearings.com/products/catalogue.html" target="_blank" style="color: rgb(0, 112, 192); text-decoration: underline;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px; color: rgb(0, 112, 192);"><strong>bearings </strong></span></a>and components is a great growth pick right now, we have highlighted three of the most important factors below:</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Earnings Growth</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">While the historical EPS growth rate for RBC Bearings is 1.3%, investors should actually focus on the projected growth. The company&#39;s EPS is expected to grow 90.3% this year, crushing the industry average, which calls for EPS growth of 6.6%.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Cash Flow Growth</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That&#39;s because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Right now, year-over-year cash flow growth for RBC Bearings is 46.3%, which is higher than many of its peers. In fact, the rate compares to the industry average of 20.6%.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">While investors should actually consider the current cash flow growth, it&#39;s worth taking a look at the historical rate too for putting the current reading into proper perspective. The company&#39;s annualized cash flow growth rate has been 12.8% over the past 3-5 years versus the industry average of 10.2%.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Promising Earnings Estimate Revisions</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">There have been upward revisions in current-year earnings estimates for RBC Bearings. The Zacks Consensus Estimate for the current year has surged 1.2% over the past month.</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;"><br/></span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">Bottom Line</span></p><p style="text-align: justify;"><span style="font-family: arial, helvetica, sans-serif; font-size: 14px;">While the overall earnings estimate revisions have made RBC Bearings a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.</span></p><p><br/></p>