Applied Industrial Technologies, Inc. (AIT)
NYSE:AIT
Top Page
Applied Industrial Technologies
(NYSE:AIT)
Select Model
Select Model
Rating:72Outperform
Price Target:
$321.00
â–²(11.07% Upside)
Action:DowngradedDate:01/28/26
The score is driven primarily by strong financial performance—durable margins, de-risking balance sheet, and robust free cash flow. Earnings-call commentary is broadly constructive with improved growth outlook and order momentum, though LIFO-related margin headwinds temper confidence. Technicals are currently soft versus the short-term trend, and valuation (P/E ~26.8 with ~0.70% yield) is not especially supportive.
Positive Factors
Free Cash Flow Strength
High and consistent free cash flow (TTM ~$458M) and near-1x FCF/NI indicate durable earnings quality and strong cash generation. This underpins sustainable capital returns, targeted M&A, and reinvestment capacity, improving resilience across industrial cycles despite periodic working-capital variability.
Negative Factors
LIFO-Related Margin Volatility
Elevated and rising LIFO expense materially pressures reported gross and EBITDA margins and introduces accounting-driven volatility. Inventory valuation swings tied to LIFO can obscure underlying operating trends and create periodic earnings compression even when underlying business performance is stable.
Read all positive and negative factors
Positive Factors
Negative Factors
Free Cash Flow Strength
High and consistent free cash flow (TTM ~$458M) and near-1x FCF/NI indicate durable earnings quality and strong cash generation. This underpins sustainable capital returns, targeted M&A, and reinvestment capacity, improving resilience across industrial cycles despite periodic working-capital variability.
Read all positive factors
Applied Industrial Technologies (AIT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.78B
Dividend Yield0.7%
Average Volume (3M)312.34K
Price to Earnings (P/E)25.4
Beta (1Y)1.15
Revenue Growth4.03%
EPS Growth5.93%
CountryUS
Employees6,818
SectorIndustrials
Sector Strength72
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)2.54
Shares Outstanding37,302,440
10 Day Avg. Volume236,046
30 Day Avg. Volume312,344
Financial Highlights & Ratios
PEG Ratio8.07
Price to Book (P/B)4.83
Price to Sales (P/S)1.95
P/FCF Ratio19.13
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue2.33
Enterprise Value/Gross Profit7.75
Enterprise Value/Ebitda18.18
Forecast
1Y Price Target
$315.00Price Target Upside8.99% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)10.66
Revenue Forecast (FY)$4.87B
Applied Industrial Technologies Business Overview & Revenue Model
Company Description
Applied Industrial Technologies, Inc. distributes industrial motion, power, control, and automation technology solutions in North America, Australia, New Zealand, and Singapore. It operates through two segments, Service Center Based Distribution, ...
How the Company Makes Money
AIT primarily makes money by selling industrial products and providing value-added services to industrial customers. Its core revenue stream is the distribution of MRO and OEM-related components—such as bearings, mechanical power transmission prod...
Applied Industrial Technologies Earnings Call Summary
Earnings Call Date:Jan 27, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call presented multiple constructive operational and financial signals: solid consolidated sales growth (8.4%), improving order trends (engineered solutions orders +10% and automation orders +20%), strong cash generation, successful integration of Hydrodyne, continued buybacks and dividend increases, and encouraging early fiscal Q3 organic growth. Headwinds were concentrated in higher-than-expected LIFO expense that materially pressured reported margins, a seasonally weak December, mixed performance across certain end markets and some segment-level organic weakness (engineered solutions organic ~0.5%). Management characterized many negatives as timing or mix-related and articulated confidence in margin recovery and mid/high‑teen incremental EBITDA targets at mid-single-digit organic growth. Balancing the broad set of operational positives and strategic actions against the notable LIFO-driven margin drag and a few soft end markets, the highlights substantially outweigh the lowlights.Positive Updates
Consolidated Sales Growth
Consolidated sales increased 8.4% year-over-year in the quarter, with acquisitions contributing ~6 percentage points and currency a +0.2 point tailwind.
Negative Updates
Higher-Than-Expected LIFO Expense
LIFO expense was ~$6.9M in the quarter (vs. the $4–5M assumed in guidance and vs. <$1M in prior-year Q2), creating an unfavorable ~54 basis point impact on gross margins and ~52 basis point headwind to EBITDA year-over-year.
Read all updates
Q2-2026 Updates
Positive
Negative
Consolidated Sales Growth
Consolidated sales increased 8.4% year-over-year in the quarter, with acquisitions contributing ~6 percentage points and currency a +0.2 point tailwind.
Read all positive updates
Company Guidance
Applied updated fiscal 2026 guidance to EPS of $10.45–$10.75 (prior $10.10–$10.85) on expected sales growth of >5.5% to up to 7% (prior 4–7%) and EBITDA margins of 12.2%–12.4% (prior 12.2–12.5%); the company now assumes LIFO expense of $24–$26M (vs. prior $14–$18M), pricing will contribute ~210–230 bps of year‑over‑year sales (up from 150–200 bps), and full‑year organic sales of 2.5%–4% (midpoint ≈4%). For Q3, management expects organic sales to be low‑ to mid‑single‑digit, gross margin to decline to the low‑30% range, and Q3 EBITDA margin to be 12.2%–12.4%; inorganic M&A and FX are expected to add ~50 bps of growth in the back half, the assumed tax rate is ~23%, and the guidance excludes future M&A or additional repurchases. Management noted recent quarterly metrics that feed into the outlook, including Q2 LIFO of ~$6.9M, Q2 reported EPS of $2.51, cash on hand of ~$406M and net leverage of ~0.3x, and reiterated opportunistic capital allocation (YTD repurchases ~550k shares for $143M).Applied Industrial Technologies Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
78
Positive
Cash Flow
85
Very Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.75B | 4.56B | 4.48B | 4.41B | 3.81B | 3.24B |
| Gross Profit | 1.43B | 1.38B | 1.34B | 1.29B | 1.11B | 935.52M |
| EBITDA | 608.83M | 579.66M | 571.03M | 527.67M | 410.13M | 263.01M |
| Net Income | 403.79M | 392.99M | 385.76M | 346.74M | 257.41M | 144.76M |
Balance Sheet | ||||||
| Total Assets | 3.16B | 3.18B | 2.95B | 2.74B | 2.45B | 2.27B |
| Cash, Cash Equivalents and Short-Term Investments | 405.99M | 388.42M | 460.62M | 344.04M | 184.47M | 257.75M |
| Total Debt | 572.30M | 572.30M | 734.94M | 622.10M | 800.25M | 919.99M |
| Total Liabilities | 1.28B | 1.33B | 1.26B | 1.28B | 1.30B | 1.34B |
| Stockholders Equity | 1.87B | 1.84B | 1.69B | 1.46B | 1.15B | 932.55M |
Cash Flow | ||||||
| Free Cash Flow | 456.85M | 465.20M | 346.53M | 317.49M | 169.45M | 225.84M |
| Operating Cash Flow | 486.87M | 492.38M | 371.39M | 343.97M | 187.57M | 241.70M |
| Investing Cash Flow | -51.15M | -318.75M | -95.41M | -60.83M | -35.66M | -44.93M |
| Financing Cash Flow | -339.94M | -245.61M | -156.47M | -126.89M | -223.03M | -213.04M |
Applied Industrial Technologies Technical Analysis
Positive
289.01
Price Trends
272.61
Positive
267.28
Positive
262.43
Positive
Market Momentum
3.19
Negative
68.00
Neutral
89.84
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIT, the sentiment is Positive. The current price of 289.01 is above the 20-day moving average (MA) of 265.72, above the 50-day MA of 272.61, and above the 200-day MA of 262.43, indicating a bullish trend. The MACD of 3.19 indicates Negative momentum. The RSI at 68.00 is Neutral, neither overbought nor oversold. The STOCH value of 89.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AIT.
Applied Industrial Technologies Risk Analysis
Applied Industrial Technologies disclosed 20 risk factors in its most recent earnings report. Applied Industrial Technologies reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Applied Industrial Technologies Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $55.47B | 28.33 | 45.93% | 0.86% | 4.83% | -3.60% | |
76 Outperform | $1.27B | 15.56 | 23.59% | 3.48% | 0.16% | 2.99% | |
75 Outperform | $56.46B | 36.60 | 32.83% | 2.10% | 6.92% | 5.98% | |
72 Outperform | $10.78B | 25.36 | 21.74% | 0.70% | 4.03% | 5.93% | |
66 Neutral | $14.77B | 18.89 | 13.02% | 0.72% | 5.28% | 1.97% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $5.33B | 31.30 | 15.00% | 3.96% | -1.35% | -22.24% |
* Industrials Sector Average
AIT
Applied Industrial Technologies
289.01
64.31
28.62%
FAST
Fastenal Company
49.17
9.36
23.50%
MSM
MSC Industrial
95.48
20.50
27.34%
GIC
Global Industrial Company
33.33
11.53
52.89%
GWW
WW Grainger
1,172.07
180.65
18.22%
WCC
Wesco International
303.51
154.60
103.82%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.