Financial Survey: Flowserve (NYSE:FLS) and RBC Bearings (NYSE:RBC)

RBC Bearings (NYSE:RBC) and Flowserve (NYSE:FLS) are both large-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, earnings, dividends, valuation and profitability.

Earnings and Valuation

This table compares RBC Bearings and Flowserve”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RBC Bearings	$1.72 billion	9.55	$246.20 million	$8.19	63.57
Flowserve	$4.56 billion	2.20	$282.76 million	$3.44	22.96

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

Dividends

RBC Bearings pays an annual dividend of $1.32 per share and has a dividend yield of 0.3%. Flowserve pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. RBC Bearings pays out 16.1% of its earnings in the form of a dividend. Flowserve pays out 24.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Flowserve has increased its dividend for 1 consecutive years. Flowserve is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

93.9% of Flowserve shares are owned by institutional investors. 1.9% of RBC Bearings shares are owned by insiders. Comparatively, 0.8% of Flowserve shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings for RBC Bearings and Flowserve, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RBC Bearings	0	2	6	0	2.75
Flowserve	0	3	9	0	2.75

RBC Bearings presently has a consensus target price of $489.17, suggesting a potential downside of 6.05%. Flowserve has a consensus target price of $79.90, suggesting a potential upside of 1.15%. Given Flowserve’s higher probable upside, analysts clearly believe Flowserve is more favorable than RBC Bearings.

Volatility and Risk

RBC Bearings has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500. Comparatively, Flowserve has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Profitability

This table compares RBC Bearings and Flowserve’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RBC Bearings	15.03%	10.47%	6.67%
Flowserve	9.66%	19.41%	7.58%

Summary

Flowserve beats RBC Bearings on 9 of the 16 factors compared between the two stocks.

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.

About Flowserve

Flowserve Corporation designs, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Flowserve Pump Division (FPD) and Flow Control Division (FCD) segments. The FPD segment offers custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services; and equipment services, including installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines and in the oil and gas production and process markets. The FCD segment provides engineered and industrial valve and automation systems, including isolation and control valves, actuation, controls, and related equipment; and equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities. This segment's products are used to control, direct, and manage the flow of liquids, gases, and multi-phase fluids. It primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was founded in 1790 and is headquartered in Irving, Texas.