Investors might want to bet on RBC Bearings (RBC) , as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Since a changing e ...

Core Insights - Wasatch Global Investors reported a challenging Q4 2025 for its Small Cap Growth Strategy, with small-cap equities underperforming broader market indices due to investor caution and preference for larger stocks [1] - The Russell 2000® Growth Index gained 1.22% in Q4 2025, while the Wasatch strategy finished in negative territory, driven by stock-specific factors rather than macroeconomic stress [1] - The Russell 2000 Growth Index advanced 13.01% for the entire 2025 calendar year, contrasting with the strategy's loss, indicating earnings volatility and valuation compression despite improving fundamentals [1] Company Focus: RBC Bearings Incorporated - RBC Bearings Incorporated (NYSE:RBC) is highlighted as a key holding, specializing in precision bearings and components for aerospace, defense, and industrial applications, emphasizing mission-critical performance [2][3] - The stock of RBC Bearings experienced a one-month return of 11.80%, with a trading range of $297.28 to $563.51 over the past 52 weeks, closing at approximately $550.40 on February 13, 2026, and a market capitalization of about $17.565 billion [2] - The management of RBC Bearings is noted for high-level execution and successful integration of acquired companies, with expectations for steady growth in 2026 [3]

Core Insights - The company reported strong performance in the aerospace and defense (A&D) markets, with total A&D sales increasing by 41.5% year-over-year, driven by a 21.5% rise in commercial aerospace and an 86.2% increase in defense sales [1][6] - The company achieved net sales of $461 million in the third quarter, reflecting a 17% increase from the previous year, with adjusted diluted earnings per share rising to $3.04, a 30% improvement [3][7] - The company is focused on debt reduction, having paid down $81 million during the quarter and an additional $67 million since, targeting full term-loan payoff by November 2026 [2][16] Financial Performance - Adjusted EBITDA increased to $149.6 million from $122.6 million, marking a 22% rise year-over-year [2] - Free cash flow for the quarter was reported at $99.1 million, with a free cash flow conversion rate of 147%, up from 127% the previous year [2][16] - The company guided for Q4 revenue between $495 million and $505 million, indicating a year-over-year growth of 13.1% to 15.4% [5][18] Market Dynamics - A&D gross margin was reported at 40.1% (or 42.2% adjusted), with improvements attributed to better plant efficiencies and pricing on customer contracts [8] - The backlog for A&D activities exceeded $2 billion, with potential incremental backlog of $500 million to $1 billion from extended contract awards [6][8] - Industrial revenue grew modestly by 3.1% year-over-year, with signs of improving demand in sectors such as semiconductors, food and beverage, and warehousing [10][11] Strategic Initiatives - The company plans to introduce several new industrial products through fiscal 2027, leveraging the Dodge acquisition for product development [12] - Management highlighted the importance of product availability and brand strength in the MRO sector, particularly for the Dodge brand [14] - A new service center is being opened in the Midwest to enhance customer service capabilities [12]