Artisan Global Discovery Fund on RBC Bearings Incorporated
Thesis
RBC Bearings is a differentiated supplier of specialty bearings, gearing and motion-control components, with more than 70% of revenue from sole- or primary-sourced parts. Commercial aerospace revenue growth accelerated to 20%, industrial markets remained strong and management raised its margin outlook. Defense growth could reaccelerate when production capacity constraints ease. The manager sees a multi-year aerospace, defense and industrial growth runway and added shares after a sector-driven decline.
“We believe RBC has a multi-year growth runway across aerospace, defense and industrial markets”
Key risks
- Capacity constraints may delay the expected defense-growth reacceleration.
- Aerospace and defense stocks have faced broad market weakness despite strong company results.
- The margin outlook requires continued operating execution across industrial and aerospace markets.