Critical Survey: RBC Bearings (NYSE:RBC) vs. Twin Disc (NASDAQ:TWIN)

Twin Disc (NASDAQ:TWIN) and RBC Bearings (NYSE:RBC) are both industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, valuation, dividends and risk.

Earnings and Valuation

This table compares Twin Disc and RBC Bearings”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Twin Disc	$347.84 million	0.64	-$1.89 million	$0.02	778.50
RBC Bearings	$1.72 billion	8.16	$246.20 million	$8.19	54.33

RBC Bearings has higher revenue and earnings than Twin Disc. RBC Bearings is trading at a lower price-to-earnings ratio than Twin Disc, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and target prices for Twin Disc and RBC Bearings, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Twin Disc	1	0	1	0	2.00
RBC Bearings	0	2	6	0	2.75

Twin Disc presently has a consensus price target of $12.00, suggesting a potential downside of 22.93%. RBC Bearings has a consensus price target of $459.17, suggesting a potential upside of 3.19%. Given RBC Bearings’ stronger consensus rating and higher possible upside, analysts plainly believe RBC Bearings is more favorable than Twin Disc.

Dividends

Twin Disc pays an annual dividend of $0.16 per share and has a dividend yield of 1.0%. RBC Bearings pays an annual dividend of $1.32 per share and has a dividend yield of 0.3%. Twin Disc pays out 800.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RBC Bearings pays out 16.1% of its earnings in the form of a dividend.

Volatility & Risk

Twin Disc has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, RBC Bearings has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500.

Institutional and Insider Ownership

65.3% of Twin Disc shares are held by institutional investors. 22.1% of Twin Disc shares are held by insiders. Comparatively, 1.9% of RBC Bearings shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Twin Disc and RBC Bearings’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Twin Disc	-0.56%	-1.22%	-0.57%
RBC Bearings	15.20%	10.14%	6.44%

Summary

RBC Bearings beats Twin Disc on 13 of the 16 factors compared between the two stocks.

About Twin Disc

Twin Disc, Incorporated engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment in the United States, the Netherlands, China, Australia, Italy, and internationally. The company operates in two segments, Manufacturing and Distribution. Its principal products include marine transmissions, azimuth drives, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. The company also provides third-party manufactured products. It sells its products through a direct sales force and distributor network to customers primarily in the pleasure craft, commercial marine, patrol, and military marine markets, as well as in the energy and natural resources, government, agriculture, recycling, construction, oil and gas, and industrial markets. The company was incorporated in 1918 and is headquartered in Milwaukee, Wisconsin.

About RBC Bearings

RBC Bearings Incorporated manufactures and markets engineered precision bearings, components, and systems in the United States and internationally. It operates through two segments, Aerospace/Defense and Industrial. The company produces plain bearings with self-lubricating or metal-to-metal designs, including rod end bearings, spherical plain bearings, and journal bearings; roller bearings, such as tapered roller bearings, needle roller bearings, and needle bearing track rollers and cam followers, which are anti-friction products that are used in industrial applications and military aircraft platforms; and ball bearings include high precision aerospace, airframe control, thin section, and industrial ball bearings that utilize high precision ball elements to reduce friction in high-speed applications. In addition, it offers mounted bearing products include mounted ball bearings, mounted roller bearings, and mounted plain bearings; and enclosed gearing product lines, including quantis gearmotor, torque arm, tigear, magnagear and maxum, and controlled start transmission. Further, the company's power transmission components include mechanical drive components, couplings, and conveyor components; 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 circulars or rod-like pieces. It serves automotive, tool holding, agricultural and semiconductor machinery, commercial and defense aerospace, ground defense, construction and mining, oil and natural resource extraction, heavy truck, marine, rail and train, material handling, food and beverage, packaging and canning, wind, and general industrial markets through its direct sales force, and a network of industrial and aerospace distributors. The company was founded in 1919 and is based in Oxford, Connecticut.