RBC Analyst Highlights Expansion Potential in Energy Infrastructure Sector Amid Canadian Bank Bullishness

RBC Capital Markets analyst Maurice Choy notes that new projects in the yield-heavy energy infrastructure sector may boost investor optimism. Enbridge, TC Energy, Emera, Hydro One, and Fortis are highlighted as stocks to watch due to their potential involvement in these projects. Meanwhile, BofA Securities analyst Ebrahim Poonawala is more bullish on Canadian banks, citing solid Q3 2025 results and potential upside to EPS.

As the second quarter of 2025 draws to a close, engineered components and systems stocks have reported mixed results. The sector, which encompasses companies with specialized technical expertise in areas such as metal forming and intelligent robotics, has seen varying performances. The impact of economic cycles, automation trends, and connected equipment collecting data has driven demand for these companies' offerings.

Among the 13 engineered components and systems stocks tracked, revenues and next quarter's revenue guidance were generally in line with analysts' consensus estimates. However, share prices have held steady, with an average increase of 2.6% since the latest earnings results.

RBC Bearings (NYSE: RBC), a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries, reported revenues of $436 million, up 7.3% year on year, exceeding analysts' expectations by 0.8%. The company's adjusted operating income also beat analysts' estimates, while EBITDA remained in line with expectations. Dr. Michael J. Hartnett, Chairman and Chief Executive Officer, attributed the strong performance to the A&D and Industrial segments and the team's efforts in driving synergies between Dodge and the broader Industrial business. The stock currently trades at $389.96 [1].

Arrow Electronics (NYSE: ARW), which provides electronic components and enterprise computing solutions globally, reported revenues of $7.58 billion, up 10% year on year, outperforming analysts' expectations by 5.9%. The company beat analysts' EPS and ECS revenue estimates, but the stock is down 2.8% since reporting, currently trading at $126.33 [1].

ESCO (NYSE: ESE), a provider of engineered components for the aerospace, defense, and utility sectors, reported revenues of $296.3 million, up 13.6% year on year, but fell short of analysts' expectations by 7%. The stock is up 5.6% since the results, currently trading at $200.91 [1].

Gates Industrial Corporation (NYSE: GTES), known for its power transmission and fluid transfer equipment, reported revenues of $883.7 million, flat year on year, surpassing analysts' expectations by 1%. The stock is up 3.4% since reporting, currently trading at $25.56 [1].

NN (NASDAQ: NNBR), which provides metal components, bearings, and plastic and rubber components to various sectors, reported revenues of $107.9 million, down 12.3% year on year, lagging analysts' expectations by 2.6%. Despite this, the stock is up 19.5% since reporting, currently trading at $2.57 [1].

In response to the Fed's rate hikes in 2022 and 2023, inflation has been trending down, and the economy has avoided recessionary signals. The recent rate cuts have bolstered the stock market, making 2024 a strong year for equities. Meanwhile, RBC Capital Markets analyst Maurice Choy notes that new projects in the yield-heavy energy infrastructure sector may boost investor optimism. Enbridge, TC Energy, Emera, Hydro One, and Fortis are highlighted as stocks to watch due to their potential involvement in these projects. BofA Securities analyst Ebrahim Poonawala is more bullish on Canadian banks, citing solid Q3 2025 results and potential upside to EPS [1].

References:
[1] https://markets.financialcontent.com/stocks/article/stockstory-2025-9-1-engineered-components-and-systems-stocks-q2-highlights-rbc-bearings-nyserbc