Q3 Earnings Preview for Regal Beloit (NYSE:RBC)

in EARNINGS/INVESTING IDEAS by

Regal Beloit Corporation (NYSE:RBC) is scheduled to report Q3 earnings results after markets close for trading on October 28, 2020.

The company is expected to report earnings of $1.21/share on revenue of $705.4 million. The consensus earnings per share (EPS) of $1.21/share is based on a poll of 8 analysts and represents a decline in eps of −10.6% over the same quarter last year, when the company reported earnings of $1.35/share.

The revenue forecast of $705.4 million based on a poll of 7 analysts implies a year-over-year (YoY) decline in revenue of −8.7%. Last year the company reported $772.3 million in revenue for the quarter.

Expected to report EPS contraction of −10.6% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $705.45 $772.30 −8.7%
EPS $1.21 $1.35 −10.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Regal Beloit Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.67 $0.95 41.6% Beat
Q1, 2020 $1.09 $1.31 20.2% Beat
Q4, 2019 $1.23 $1.25 2.0% Beat
Q3, 2019 $1.32 $1.35 2.0% Beat
Q2, 2019 $1.62 $1.52 −6.4% Missed
Q1, 2019 $1.42 $1.43 0.4% Beat
Q4, 2018 $1.31 $1.41 7.6% Beat
Q3, 2018 $1.60 $1.67 4.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $91.97 $92.58 0.7% Increase
May 4, 2020 $69.27 $72.48 4.6% Increase
February 3, 2020 $78.46 $84.83 8.1% Increase
November 4, 2019 $76.44 $82.78 8.3% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.02, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.02 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Regal Beloit Corporation is currently trading at $96.66/share, down −3.5% for the day. The company is trading at approximately 93.6% of its 52-week high of $103.32/share. The company’s stock price is up 4.4% since the last earnings report and down −3.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 45.82 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:RBC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 24.47 and a forward P/E multiple of 21.03.

Regal Beloit Corporation’s current share price also implies a price-to-book (P/B) multiple of 1.69. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $96.66
P/E Ratio 24.5x
P/E Ratio (Fwd) 21.0x
PEG Ratio −0.7
Total Debt / Total Capital 22.8%
Levered Free Cash Flow $410.9 million
EV / EBITDA 11.2x

Finbox

Regal Beloit Corporation is a mid-cap stock with a market capitalization of $3.922 billion and a total enterprise value of $4.726 billion. The company operates in the Industrials sector and the Electrical Equipment industry.

Regal Beloit Corporation, together with its subsidiaries, designs, manufactures, and sells electric motors, electrical motion controls, and power generation and transmission products worldwide. It operates through four segments: Commercial Systems, Industrial Systems, Climate Solutions, and Power Transmission Solutions. The Commercial Systems segment provides AC and DC motors, electronic variable speed controls, fans, blowers, and precision stator and rotor kits. The Industrial Systems segment offers AC motors for industrial applications; electric alternators for prime and standby power applications to data centers, marine, agriculture, healthcare, mobile, and defense markets; and power generation switchgear for prime and standby power, distributed generation, and cogeneration applications, as well as residential, automatic, and bypass isolation transfer switches. The Climate Solutions segment provides fractional motors, electronic variable speed controls, and blowers, as well as fractional horsepower motors for residential and light commercial HVAC, water heater, and commercial refrigeration markets. The Power Transmission Solutions segment offers mounted and unmounted bearings; conveyor products; disc, diaphragms, gear and flexible couplings, transmission elements, gears, grids, jaws, elastomers, and joints; mechanical power transmission drives, and components; and worm gearing, shaft configuration, helical offset, concentric and right angle, bevel and miter gearing, center pivot gearing, and open gearing products, as well as modular plastic belts, conveying chains, and hydraulic pump drives. It serves beverage, bulk handling, metal, special machinery, energy, and aerospace and general industrial markets. The company sells its products directly to original equipment manufacturers and end-users through a network of direct and independent sales representatives, and distributors. Regal Beloit Corporation was founded in 1955 and is based in Beloit, Wisconsin.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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