RBC BEARINGS INCORPORATED (RBC): what the price assumes
In the published model solve dated 2026-Q2, anchored at $572.52, RBC BEARINGS INCORPORATED (RBC) is priced for today's economics sustained for ~8.9 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/RBC
Headline
| Field | Value |
|---|---|
| Ticker | RBC |
| Company | RBC BEARINGS INCORPORATED |
| Current price | $572.52/sh |
| Composition | Aerospace & Defense 42% / Industrial 58% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 16.2% |
| Operating margin today | 23.6% |
| Margin compression (value-band) | -7.4pp |
| Must persist for | 8.9y |
| Multiple paid | 41x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 9.5% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +0.70σ |
| cohort percentile (of 221 peers) | 87 |
| sustained it ~8.9 years at this level | 17% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.24x | 5 | expensive |
| Earnings | 4.73x | 5 | expensive |
| Relative | 1.85x | 2 | expensive |
| Growth | 1.12x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.8%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $397.74 | 1.44x | yes | FCF base $0.5B, growth 17% (input: historical growth), terminal g 4.0%, WACC 8.8%, 6yr projection |
| DCF Exit Multiple | Growth | $579.38 | 0.99x | yes | Exit EV/EBITDA: 30.0x / 32.0x / 34.0x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | — | — | no | P/E 29.59x (blended: static sector reference 18x + trailing (TTM) 57x), scenarios: 24.2x / 29.6x / 35.0x (bear / base = reference held flat / bull), EV/EBITDA 18.01x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $109.29 | 5.24x | yes | BV/sh $109.16, ROE (TTM) 9.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $109.35 | 5.24x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $509.14 | 1.12x | yes | Rev $2.0B, growth 17% (input: historical growth; tapered), Terminal P/S: 7.6x / 9.3x / 11.0x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $262.32 | 2.18x | yes | EPS $10.12, growth 26% (input: historical EPS growth), PEG=2.19 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $55.16 | 10.38x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.33B × (1−22%) / WACC 8.8% → EPV (no growth) |
| Residual Income | Asset | $109.36 | 5.24x | yes | BV $109.16 + 5yr PV of (ROE (TTM) 9.3% − Kₑ 9.3%) × BV; BV grows 6.0%/yr |
| Graham Number | Asset | $157.66 | 3.63x | yes | √(22.5 × EPS $10.12 × BVPS $109.16) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.59B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $132.74 | 4.31x | yes | FCF $467.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $120.94 | 4.73x | yes | SBC-adj FCF $0.43B (FCF $0.47B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $326.54 | 1.75x | yes | EPS $10.12 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $31.54 | 18.15x | yes | BV $109.16 × (ROIC 2.5% / WACC 8.8%) |
| P/Sales Sector | Relative | — | — | no | Revenue $1.95B × sector P/S 2.5x |
| PEG Fair Value | Relative | $379.50 | 1.51x | yes | EPS $10.12 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $109.41 | 5.23x | yes | EPS $10.12 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Aerospace & Defense | operating | enterprise | $788.0m | — | withheld | unresolved no unit value |
| Industrial | operating | enterprise | $1.1b | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $727.8m |
| Net debt / NOPAT (after-tax) | 2.03x |
| Net debt / operating income (pre-tax) | 1.58x |
| Share count CAGR (dilution) | 2.3% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
The balance sheet tells the recent story. RBC took on debt to buy Dodge, and net debt now sits near $864 million against trailing operating income near $421 million, with interest coverage near 8.5 times. The business is deleveraging while growing, which is what gives management room to keep investing through the aerospace cycle.
The aerospace and defense engine is firing. Fiscal 2026 net sales grew 14.3% to $1.87 billion, with A&D up 32.9% and the fourth quarter's A&D segment up 41.2% on the commercial-aircraft build cycle and defense procurement. Management expects commercial aerospace to grow more than 15% in fiscal 2027.
The price prices most of that and more. At $638.97 the market pays roughly 54 times company-wide operating income, implying durable high growth for about 11 years. Only the growth-DCF reaches the price; the asset, earnings, and peer-multiple methods sit far below, a steep moat and durability premium.
Bull Case
Start with the balance sheet, because it reveals what management believes about its own business. RBC carries net debt near $864 million, the residue of its transformational Dodge industrial-bearings acquisition, but it is servicing that debt comfortably (interest coverage near 8.5 times) and paying it down while still growing double-digits. A management team that takes on leverage for a large acquisition and then grows into it is signaling confidence that the combined franchise compounds, and the results have validated that: fiscal 2026 net sales grew 14.3% to $1.87 billion with gross margin holding at 44.4%, evidence the integration has not diluted the model.
The aerospace and defense franchise is the crown jewel and it is accelerating. A&D revenue grew 32.9% in fiscal 2026 and 41.2% in the fourth quarter, riding the commercial-aircraft build cycle and global defense procurement. The customer roster is the moat in plain sight: the 10-K lists the largest A&D customers as "the U.S. Department of Defense, Boeing, Airbus, Newport News Shipbuilding, Lockheed Martin, Northrop Grumman, Raytheon, Blue Origin and SpaceX" (FY2025 10-K, accession 0001213900-25-044893). Precision bearings that are designed into aircraft and defense platforms carry long qualification cycles and high switching costs, so that revenue is sticky and high-margin, and management has guided commercial aerospace to grow more than 15% in fiscal 2027 with defense and space faster still.
The profitability and self-funding economics support a premium. Adjusted gross margin expanded to 45.2%, net income margin rose to 15.4%, and the company generates free cash flow near $416 million that funds both debt reduction and reinvestment. Fourth-quarter adjusted EPS of $3.62 beat expectations. For the bull, RBC is a niche, design-in industrial and aerospace compounder with deep backlogs, expanding margins, and a balance sheet moving the right direction, the kind of durable franchise the growth-DCF (near $612 on the exit-multiple method) says supports the price.
Bear Case
The structural truth a holder has to face is that the multiples are pricing what has not happened yet. At $638.97 (June 28, 2026) the price is about 54 times company-wide operating income, which requires RBC to hold a high, self-funding growth pace for roughly 11 years. Only about 14% of comparable fast-growers have sustained such a run for even a decade. That is not a valuation that leaves room for the aerospace cycle to be a cycle; it assumes the current A&D surge is closer to a permanent rate. The market signaled this tension itself: the stock fell after a fiscal fourth-quarter report that beat on earnings, the classic sign of a price that already embeds the good news.
The valuation methods make the gap unmistakable, and only one reaches the price. Asset, earnings-power, and peer-multiple models all say richly valued: earnings power value near $49, simple excess return near $98, the Graham number near $147, sector EV/EBITDA near $175, and even the relative method near $332, all far below the quote. Only the growth-DCF lands at the price (exit-multiple DCF near $612). The blended central estimate is about $232 and the reasonable-value base near $198. A holder paying $639 is paying roughly three times what the methods that value the business on its current earnings support, on the faith that durable compounding continues for over a decade.
Two realities make that faith fragile. First, return on equity is only about 8.6%, below the cost of equity, because the Dodge goodwill sits on a roughly $106 book value and the acquired industrial earnings have not lifted consolidated returns above the hurdle. The industrial segment grew just 3.8% in fiscal 2026, far slower than A&D, so the company's growth is concentrated in the cyclical aerospace build cycle. Second, that build cycle depends on Boeing and Airbus production rates and defense budgets, variables outside RBC's control and historically prone to disruption. If commercial aerospace decelerates from its current pace, or a production hiccup at a major airframer interrupts the backlog conversion, a 54-times multiple has a long way to fall toward the methods clustered near $200, and the leverage that funded Dodge amplifies the downside.
Valuation
The inversion runs in duration mode, the right frame for a high-multiple compounder. At $638.97 RBC trades at roughly 54 times company-wide operating income, which solves to the company holding its self-funding growth ceiling for about 11 years at a 9.7% cost of capital. Each one-point change in the cost of capital moves the implied horizon about 2.1 years. The near-term growth pace is within recent history; the priced-in assumption is elevated because of how long it must persist, and only about 14% of comparable fast-growers have sustained such a run for a decade.
The method families make the bet explicit, and the characterization is direct: asset, earnings-power, and peer-multiple models all say richly valued, and only the growth-DCF reaches the price. The growth family lands at or near the price (exit-multiple DCF near $612, discounted-future-market-cap near $527, though the perpetual-growth DCF is lower near $303). The asset and earnings families sit far below: earnings power value near $49, simple excess return near $98, residual income near $94, Graham number near $147. The blended central estimate is about $232, and the reasonable-growth band runs from about $127 at the low to $198 at the base, with the high case near $260.
The reconciliation is a moat and durability premium the static frames cannot price. Two adjustments are worth noting. The asset and earnings methods are depressed because Dodge acquisition goodwill sits on the book and holds reported return on equity near 8.6%, below the cost of equity, so those methods understate a high-quality design-in franchise. But even allowing for that, the gap between the price and every method except the growth-DCF is unusually wide, which is the model flagging how much of the value sits in years that have not occurred. The balance sheet (net debt near $864 million, interest coverage near 8.5 times) is manageable and improving, so the question is not solvency but whether a decade-plus of compounding actually arrives.
Catalysts
The most recent catalyst was the fiscal 2026 fourth-quarter and full-year report. Full-year net sales grew 14.3% to $1.87 billion, with Aerospace & Defense up 32.9% and Industrial up 3.8%; fourth-quarter sales grew 18.3% with A&D up 41.2%, and adjusted EPS of $3.62 beat the roughly $3.32 expected. Notably the stock fell despite the beat, a sign the price already embeds strong results.
The forward catalyst is aerospace momentum. Management guided commercial aerospace to grow more than 15% in fiscal 2027, with defense and space expected to grow faster, both tied to the commercial-aircraft build cycle and global defense procurement. Each quarter's read on A&D growth and backlog conversion is the key marker for whether the durable-compounding thesis the price embeds holds.
The balance-sheet trajectory is the other catalyst worth tracking: continued Dodge-related debt paydown would lift consolidated returns toward the cost of equity over time. The main risks are a deceleration in commercial aerospace, a production disruption at Boeing or Airbus, and the slower-growing industrial segment, any of which would pressure a price that assumes a long runway of high growth.
Sources: RBC Bearings fiscal 2026 results (RBC Bearings investor relations, Investing.com, Grafa), FY2025 10-K customer disclosures.
Peer Cohorts (Per Segment, With Filing Citations)
Aerospace & Defense (reported)
- HEI (HEICO CORPORATION)
- FY2025 10-K: …and business aircraft, aircraft engines and related components and equipment. Due in large part to our established industry presence, we enjoy strong customer relations, name recognition and repeat business. We sell our products to a broad customer base consisting of domestic and foreign commercial and cargo…
- FY2025 10-K: …misappropriation or obsolescence from occurring by developing new techniques and improving existing methods and processes, which we will continue on an ongoing basis as dictated by the technological needs of our business. We believe that, based on our competitive pricing, reputation for high quality, short lead time…
- TDG (TransDigm Group Incorporated)
- FY2025 10-K: …following table sets forth, for the periods indicated, certain financial information by reportable segment, which includes a reconciliation of EBITDA As Defined to consolidated income from continuing operations before income taxes (in millions): Fiscal Year Ended September 30, 2025 Power & Control Airframe…
- FY2025 10-K: ; (5) defense OEMs; (6) system suppliers; and (7) various other industrial customers. Our top ten customers for fiscal year 2025 accounted for approximately 40% of our net sales. Products supplied to many of our customers are used on multiple platforms. None of our customers individually accounted for greater than 10%…
- CW (CURTISS-WRIGHT CORPORATION)
- FY2025 10-K: …avionics and electronics, flight test equipment, and aircraft data management solutions. The Naval & Power reportable segment is comprised of businesses that primarily provide products to the naval defense and power & process markets, and to a lesser extent, the aerospace defense markets. The products offered include…
- FY2025 10-K: …The commercial aerospace business is primarily impacted by OEM production rates of new aircraft, while the defense business is primarily impacted by government funding and spending on new programs, primarily driven by the U.S. Government. Certain industrial businesses within our Aerospace & Industrial segment are…
- TKR (TIMKEN CO)
- FY2025 10-K: …and the Company to meaningfully evaluate the percentage change in net sales on a comparable basis from period to period. The following item highlights the Company ' s acquisition completed in 2024: • The Company acquired CGI, Inc. ("CGI") during the third quarter of 2024. Results for CGI are reported in the…
- FY2025 10-K: …and oscillating movements in a variety of applications and end-markets including aircraft controls, packaging equipment, off-highway equipment, heavy truck, performance auto racing, robotics and many more. Various combinations of material pairs and engineered coatings improve friction management for application…
- MOG-A (MOOG Inc.)
- FY2025 10-K: …in aerospace and defense and industrial markets. We have four operating segments: Space and Defense, Military Aircraft, Commercial Aircraft and Industrial. Additional information describing the business and comparative segment revenues, operating profits and related financial information for 2025, 2024 and 2023 are…
- FY2025 10-K: …by a broad range of factors. Aerospace and Defense Within aerospace and defense, we serve three end markets: defense, commercial aircraft and space. The defense market is dependent on military spending for development and production programs. We have a growing development program order book for future generation…
- WWD (WOODWARD, INC.)
- FY2025 10-K: …technology and design, product performance, and conformity with customer specifications. Additional factors are customer service and support, including on-time delivery and customer partnering, product quality, price, reputation, and local presence. Both of our segments operate in uniquely competitive environments.…
- FY2025 10-K: …to new product concepts. We believe this collaboration allows us to develop technology, new systems, and products that are aligned with our customers' needs and future performance, which increases the likelihood that our systems and components will be selected for inclusion in the platforms developed by our…
- HXL (HEXCEL CORP /DE/)
- FY2025 10-K: …of aircraft. Defense, Space & Other The Defense, Space & Other market represented 39% of our 2025 net sales. The Defense, Space & Other market has historically been an innovator in the use of, and source of significant demand for, advanced composites. The aggregate demand by Defense, Space & Other customers is…
- FY2025 10-K: …sales for 2025 increased by 2.5% over the prior year primarily driven by higher sales of launchers. Engineered Products: For the year ended December 31, 2025, net sales of $377.7 million increased $5.7 million or 1.5% as compared to the prior year, driven by a 13.4% increase in Defense, Space & Other sales driven by…
Industrial (reported)
- TKR (TIMKEN CO)
- FY2025 10-K: Industrial Corp. The e-business service focuses on information and business services for authorized distributors. Timken has entered into individually negotiated contracts with some of its customers. These contracts may extend for one or more years and, if a price is fixed for any period extending beyond current…
- FY2025 10-K: …and heavy truck distributors. The Industrial Motion portfolio features products such as drives, breathers, seals, automatic lubrication systems, linear motion products, chain, belts, couplings, industrial clutches and brakes, and gears and gearboxes. The portfolio products and services are sold to OEMs and end users…
- KMT (KENNAMETAL INC)
- FY2025 10-K: …manufacturing capabilities in combination with varying levels of customization to solve our customers' toughest challenges and deliver improved productivity for a wide range of applications. Metal Cutting markets its products under the Kennametal ® , WIDIA ® , WIDIA Hanita ® and WIDIA GTD ® brands through its direct…
- FY2025 10-K: …As of June 30, 2025, the foreign currency-denominated intercompany loans payable designated as net investment hedges consisted of: Instrument Notional (CNY in thousands) (2) Notional (USD in thousands) (2) Maturity Foreign currency-denominated intercompany loan payable ¥ 82,304 $ 11,487 March 2026 (2) Includes…
- RRX (REGAL REXNORD CORP)
- FY2025 10-K: …products, including mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes and gear motors, clutches, brakes, and industrial powertrain components and solutions. Increasingly, the segment produces industrial powertrain solutions, which are integrated sub-systems…
- FY2025 10-K: …28,700 full-time people in its global manufacturing, sales, and service facilities and corporate offices. For the year ended December 31, 2025, we reported annual net sales of $5.9 billion compared to $6.0 billion for the year ended December 31, 2024. Our company is comprised of three operating segments: Automation &…
- DCI (DONALDSON COMPANY, INC.)
- FY2025 10-K: …and OEM dealer networks. The Industrial Solutions segment is organized based on product type and consists of Industrial Air Filtration, Industrial Gases, Industrial Hydraulics, Power Generation and Aerospace and Defense products. These products are further organized by the Industrial Filtration Solutions and…
- FY2025 10-K: …of the segments. The CODM considers variances in reported results to budget and variances to prior periods to make decisions about allocating resources to each segment. The Company's CODM is the Chief Executive Officer. In fiscal 2025 and 2024, Corporate and Unallocated included a charge of $ 16.8 million and $ 6.4…
- IEX (IDEX CORP)
- FY2025 10-K: …Company is exposed to fluctuations in commodity pricing and inflation, including the impact of tariffs, and attempts to control these impacts through increased prices to customers and various other programs with its suppliers. Suppliers The Company manufactures many of the parts and components used in its products.…
- FY2025 10-K: …greater stability to its operations, allows the Company to drive economies of scale, provides revenue streams that may help offset economic trends that are specific to individual economies and offers the Company an opportunity to access new markets for products. 8 Table of Contents The following table illustrates…
- ITT (ITT INC.)
- FY2025 10-K: …end-users. IP's customers operate in global infrastructure and natural resource markets such as energy, chemical and petrochemical, pharmaceutical, general industrial, marine, mining, pulp and paper, food and beverage, power generation and biopharmaceutical. IP's marketplace-recognized brands include Goulds Pumps TM…
- FY2025 10-K: …financial statements upon adoption. NOTE 3 SEGMENT INFORMATION The Company's segments are reported on the same basis used by our chief operating decision maker (CODM) for evaluating performance and for allocating resources. The Company's CODM is the President and Chief Executive Officer. The CODM allocates resources…
- GGG (GRACO INC.)
- FY2025 10-K: Industrial Segment The Industrial segment represented approximately 45 percent of our total sales in 2025. It includes the Industrial and Powder divisions. The Industrial segment markets equipment and solutions for moving and applying paints, powder coatings, sealants, adhesives and other fluids. Markets served…
- FY2025 10-K: …then supply to their customers. Industrial The Industrial division designs and manufactures liquid finishing and advanced fluid dispensing equipment; pumps to move chemicals, petroleum, food, and other fluids; and systems, components, and accessories for the automatic lubrication of bearings, gears, and generators.…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.