SKF (SKFRY) versus RBC Bearings (ROLL) Financial Analysis

SKF (OTCMKTS: SKFRY) and RBC Bearings (NASDAQ:ROLL) are both mid-cap industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, valuation, analyst recommendations, institutional ownership and dividends.

Analyst Ratings

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This is a summary of current recommendations for SKF and RBC Bearings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SKF 1 1 1 0 2.00
RBC Bearings 0 0 3 0 3.00

RBC Bearings has a consensus price target of $140.67, suggesting a potential upside of 12.76%. Given RBC Bearings’ stronger consensus rating and higher possible upside, analysts clearly believe RBC Bearings is more favorable than SKF.

Earnings and Valuation

This table compares SKF and RBC Bearings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SKF $9.14 billion 1.05 $642.21 million $1.41 14.91
RBC Bearings $615.39 million 4.92 $70.62 million $3.17 39.35

SKF has higher revenue and earnings than RBC Bearings. SKF is trading at a lower price-to-earnings ratio than RBC Bearings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SKF and RBC Bearings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SKF 7.03% 19.23% 6.78%
RBC Bearings 12.52% 11.79% 8.00%

Institutional and Insider Ownership

0.5% of SKF shares are owned by institutional investors. Comparatively, 99.5% of RBC Bearings shares are owned by institutional investors. 3.7% of RBC Bearings shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

SKF has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, RBC Bearings has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Dividends

SKF pays an annual dividend of $0.59 per share and has a dividend yield of 2.8%. RBC Bearings does not pay a dividend. SKF pays out 41.8% of its earnings in the form of a dividend.

Summary

RBC Bearings beats SKF on 12 of the 16 factors compared between the two stocks.

About SKF

AB SKF (publ) offers bearings, seals, mechatronics, condition monitoring, lubrication systems, and services. It operates in two segments, Industrial and Automotive. The company's products include bearings, units, and housings; seals; lubrication solutions; linear motion systems; actuation systems, screws, and linear guides and tables; magnetic bearings/permanent magnetic electric motors; mechatronic solutions; maintenance products; condition monitoring systems; power transmission products and solutions; coupling systems; test and measurement equipment; and vehicle aftermarket products, such as wheel end, powertrain, driveline, and steering and suspension products, as well as tools and lubricants. Its services comprise asset management, customer training, engineering consultancy, logistics, mechanical maintenance, and remanufacturing and maintenance services. The company offers its solutions for various industries, including aerospace, agriculture, automation, cars and light trucks, compressors, construction, electric motors, food and beverage, home appliances, industrial fans and pumps, industrial transmissions, machine tools, marine, material handling, medical and health care, metals, mining, mineral processing, ocean energy, oil and gas, portable power tools, power generation, pulp and paper, racing, railways, skates, trucks, trailers and buses, two and three wheelers, and wind energy. AB SKF (publ) markets its products directly, as well as through a network of distributors in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company was founded in 1907 and is headquartered in Gothenburg, Sweden.

About RBC Bearings

RBC Bearings Incorporated is an international manufacturer and marketer of engineered precision bearings and products, which are integral to the manufacture and operation of machines, aircraft and mechanical systems. The Company operates through four segments: Plain Bearings; Roller Bearings; Ball Bearings, and Engineered Products. The Company has over 40 facilities of which over 30 are manufacturing facilities in approximately five countries. The Company classifies its customers into two categories: industrial and aerospace. The Company manufactures bearings and engineered products for a range of diversified industrial markets, including construction and mining, oil and natural resource extraction, heavy truck, marine, rail and train, packaging, semiconductor machinery and the general industrial markets. The Company supplies bearings and engineered products for use in commercial, private and military aircraft and aircraft engines, guided weaponry, and vision and optical systems.

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