Critical Analysis: Flowserve (NYSE:FLS) and RBC Bearings (NYSE:RBC)

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

Volatility and Risk

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

Profitability

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

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

Insider and Institutional Ownership

93.9% of Flowserve shares are held by institutional investors. 0.7% of Flowserve shares are held by company insiders. Comparatively, 1.9% of RBC Bearings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

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

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

Flowserve currently has a consensus target price of $79.90, indicating a potential upside of 0.26%. RBC Bearings has a consensus target price of $489.17, indicating a potential downside of 5.02%. Given Flowserve’s higher probable upside, equities research analysts plainly believe Flowserve is more favorable than RBC Bearings.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flowserve	$4.56 billion	2.22	$282.76 million	$3.44	23.17
RBC Bearings	$1.64 billion	9.95	$246.20 million	$8.19	62.88

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.

Summary

Flowserve beats RBC Bearings on 7 of the 13 factors compared between the two stocks.

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.

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.