Regal Beloit Bets On Buyouts & Restructuring To Fuel Growth
Zacks Investment Research | Sep 18, 2016 09:20PM ET
On Sep 19, 2016, Zacks Investment Research upgraded Regal Beloit Corporation (NYSE:RBC) to a Zacks Rank #3 (Hold).
Headquartered in Beloit, WI, Regal Beloit is a leading manufacturer of electrical and mechanical motion control products. The company offers a wide array of stock model and customized electric motors, blowers, electric generators, transfer switches, switchgear, valves, gearboxes, power generation components and controls. Regal Beloit has manufacturing, sales and service facilities throughout the U.S., Canada, Mexico, Europe and Asia. The company has a diversified customer base across the globe including OEMs, distributors and end users.
Macroeconomic Factors
Regal Beloit’s long-term growth strategy involves organic growth through innovation of new products, broadening of customer base, exploitation of new opportunities and tactical investments in emerging markets. Over the years, the company has consolidated its product lines and streamlined product brands to evolve as a dynamic enterprise. In order to drive continuous improvement, Regal Beloit follows ‘Compass Operating System’ that encompasses a common set of business processes, disciplines and lean Six Sigma tools. Backed by an “open-door” management style, this has helped the company to gain a competitive advantage and reach more people in diverse markets around the world.
The company has expanded technologically and geographically on the back of its aggressive acquisition policy. The management has further indicated its plan to continue seeking accretive acquisitions as part of its overall growth strategy. The acquisition of Benshaw Inc., on Jul 1, 2014, expanded Regal Beloit’s portfolio of customized electronic drives and controls. In addition, on Dec 15, 2014, the company made a strategic purchase of the Power Transmission Solutions business of Emerson Electric Co. which has further broadened its product portfolio, diversified end-market exposure and strengthened global footprint with complementary products and well-known brands. Subsequent to the acquisition, Regal Beloit has reorganized its segments to improve transparency, simplify external communication with clients and align segment reporting with the new management structure. All these efforts augur well for the long-term growth of the company.
However, Regal Beloit’s second-quarter results were severely impacted by the fragilities in the oil & gas sector and the overall industrial end markets. The company expects its sales to be affected by the continued weakness in industrial markets. Consequently, the company revised its guidance for 2016 and anticipates adjusted earnings per share to be in the range of $4.35 to $4.55, down from the earlier projection of $4.40 to $4.80.
REGAL BELOIT Price and Consensus
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