NEW YORK (TheStreet) -- Regal-Beloit (RBC - Get Report) has been upgraded to "outperform" from "neutral," Robert Baird said Wednesday. The firm said the revision was a valuation call based on an $87 price target.
Separately, TheStreet Ratings team rates REGAL-BELOIT CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate REGAL-BELOIT CORP (RBC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- REGAL-BELOIT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, REGAL-BELOIT CORP reported lower earnings of $2.64 versus $4.64 in the prior year. This year, the market expects an improvement in earnings ($4.56 versus $2.64).
- The gross profit margin for REGAL-BELOIT CORP is currently lower than what is desirable, coming in at 29.55%. Regardless of RBC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RBC's net profit margin of -4.56% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: RBC Ratings Report