Is Further Upside Left in the Stock?

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This story originally appeared on Zacks

Regal Beloit Corporation (RBC) shares ended the last trading session 3.4% higher at $151.89. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock’s 1.7% loss over the past four weeks.

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Regal Beloit’s rally is largely driven by optimism over its ongoing acquisition process of Rexnord Corporation’s RXN Process & Motion Control segment. The transaction is expected to boost Regal Beloit’s product line and enhance its position as a major provider of power transmission solutions. Also, the company’s decision to pay a special cash dividend of $6.99 per share seems to have boosted investor sentiments.

This maker of controls for electric motors is expected to post quarterly earnings of $2.34 per share in its upcoming report, which represents a year-over-year change of +35.3%. Revenues are expected to be $894.43 million, up 18% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Regal Beloit, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on RBC going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

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