For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit.  Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.  Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

In contrast to all that, many investors prefer to focus on companies like RBC Bearings (NYSE:RBC), which has not only revenues, but also profits.  While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

How Fast Is RBC Bearings Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually.  So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research.   Shareholders will be happy to know that RBC Bearings' EPS has grown 21% each year, compound, over three years.   If growth like this continues on into the future, then shareholders will have plenty to smile about.  

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing.    RBC Bearings maintained stable EBIT margins over the last year, all while growing revenue 6.2% to US$1.6b.  That's progress.  

In the chart below, you can see how the company has grown earnings and revenue, over time.  For finer detail, click on the image.

NYSE:RBC Earnings and Revenue History June 22nd 2024

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of RBC Bearings' forecast profits?

Are RBC Bearings Insiders Aligned With All Shareholders?

Since RBC Bearings has a market capitalisation of US$8.0b, we wouldn't expect insiders to hold a large percentage of shares.  But we are reassured by the fact they have invested in the company.     Indeed, they have a considerable amount of wealth invested in it, currently valued at US$142m.   Holders should find this level of insider commitment quite encouraging, since it would ensure that the leaders of the company would also experience their success, or failure, with the stock.  

Is RBC Bearings Worth Keeping An Eye On?

For growth investors, RBC Bearings' raw rate of earnings growth is a beacon in the night.   With EPS growth rates like that, it's hardly surprising to see company higher-ups place confidence in the company through continuing to hold a significant investment.  The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value.     We don't want to rain on the parade too much, but we did also find 2 warning signs for RBC Bearings that you need to be mindful of.  

Although RBC Bearings certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of  companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com