SKF (SKFRY) and RBC Bearings (ROLL) Critical Analysis

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

Dividends

SKF pays an annual dividend of $0.55 per share and has a dividend yield of 2.7%. RBC Bearings does not pay a dividend. SKF pays out 39.0% of its earnings in the form of a dividend.

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 7.36% 20.81% 7.40%
RBC Bearings 12.52% 11.79% 8.00%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SKF $9.14 billion 1.02 $642.21 million $1.41 14.54
RBC Bearings $615.39 million 4.54 $70.62 million $3.17 36.27

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.

Volatility and Risk

SKF has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, RBC Bearings has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for SKF and RBC Bearings, as provided by MarketBeat.

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 target price of $140.67, indicating a potential upside of 22.34%. Given RBC Bearings’ stronger consensus rating and higher probable upside, analysts plainly believe RBC Bearings is more favorable than SKF.

Insider and Institutional Ownership

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

Summary

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

SKF Company Profile

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.

RBC Bearings Company Profile

RBC Bearings Incorporated manufactures and markets engineered precision bearings and components in North America, Europe, Asia, and Latin America. It operates in four segments: Plain Bearings, Roller Bearings, Ball Bearings, and Engineered Products. The Plain Bearings segment produces plain bearings with self-lubricating or metal-to-metal designs, including rod end bearings, spherical plain bearings, and journal bearings that are primarily used to rectify misalignments in various mechanical components, such as aircraft controls, helicopter rotors, or in heavy mining and construction equipment. The Roller Bearings segment provides heavy duty needle roller bearings with inner rings, tapered roller bearings, track rollers, and aircraft roller bearings, which are anti-friction bearings that use rollers instead of balls. The Ball Bearings segment specializes in high precision aerospace, airframe control, thin section, and commercial ball bearings that utilize high precision ball elements to reduce friction in high speed applications. The Engineered Products segment offers engineered hydraulics and valves for aircraft and submarine applications, and aerospace and defense aftermarket services; fasteners; precision mechanical components, which are used in various general industrial applications; and machine tool collets that are used for holding circular or rod. It serves the construction and mining, oil and natural resource extraction, heavy truck, marine, rail and train, packaging, semiconductor machinery, and other general industrial markets. The company offers its products through direct sales force, and a network of industrial and aerospace distributors. RBC Bearings Incorporated was founded in 1919 and is headquartered in Oxford, Connecticut.

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