What Happened?
Shares of bearings manufacturer RBC Bearings (NYSE: RBC) jumped 4.6% in the morning session after the company reported strong fiscal third-quarter results that surpassed analyst expectations and provided an optimistic outlook for the upcoming quarter.
Net sales for the quarter increased by 17% compared to the previous year, reaching $461.6 million. This growth was mainly driven by a significant 41.5% jump in its Aerospace/Defense segment, which saw high demand from submarine, missile, and aircraft programs. The industrial segment also saw a modest increase of 3.1%. Adjusted profit per share rose to $3.04, a 29.9% increase from the same period in the prior year and ahead of market forecasts. Looking forward, RBC Bearings projected fourth-quarter net sales growth between 13.1% and 15.4%. In response to the strong performance and positive forecast, BofA Securities upgraded the stock from Neutral to Buy, and KeyBanc Capital Markets raised its price target on the shares.
After the initial pop the shares cooled down to $542.83, up 4.4% from previous close.
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What Is The Market Telling Us
RBC Bearings’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 29 days ago when the stock gained 2.9% on the news that markets rotated out of tech names to position themselves for a massive injection of government spending.
The sector was ignited by President Trump's call for a $1.5 trillion defense budget for 2027, a significant increase that sent defense contractors surging. Northrop Grumman jumped over 10% and Lockheed Martin gained nearly 8%, acting as the primary engine for the sector's outperformance. Beyond the immediate defense rally, the industrial sector benefited from a broader stabilization in energy costs, with crude prices rebounding. This combination of policy-driven demand and stabilizing input costs made heavy industry an attractive destination.
RBC Bearings is up 18.3% since the beginning of the year, and at $542.83 per share, has set a new 52-week high. Investors who bought $1,000 worth of RBC Bearings’s shares 5 years ago would now be looking at an investment worth $2,989.
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