RBC's Sales Growth Disappoints in Third Quarter, But the Firm's Competitive Advantages Are Intact

We're raising our fair value estimate for RBC Bearings to $51 per share from $50 per share following the release of the firm's fiscal third-quarter results. The slight gain is due to the effect of the time value of money since our last update, partially offset by a marginal cut to our sales and profit forecast. RBC looks like it will struggle to achieve our previous fiscal 2014 revenue estimate and we have cut our near-term outlook accordingly. We're expecting sales to grow about 3% this year; however, we continue to believe that sales growth will accelerate over the next couple years as RBC reaps the benefits of its exposure to the growing commercial aerospace industry. We're keeping our narrow moat rating intact.