Applied Industrial Technologies (AIT) AI Stock Analysis

• Market Cap: $9.36B
• Dividend Yield: 0.75%
• Average Volume (3M): 564.64K
• Price to Earnings (P/E): 24.6
• Beta (1Y): 1.13
• Revenue Growth: 0.50%
• EPS Growth: 4.48%
• Country: US
• Employees: 6,818
• Sector: Industrials
• Sector Strength: 86
• Industry: Industrial - Distribution
• EPS (TTM): 2.57
• Shares Outstanding: 38,084,640
• 10 Day Avg. Volume: 1,136,983
• 30 Day Avg. Volume: 564,645
• PEG Ratio: 24.98
• Price to Book (P/B): 4.77
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 19.72
• Enterprise Value/Market Cap: 0.95
• Enterprise Value/Revenue: 0.49
• Enterprise Value/Gross Profit: 6.56
• Enterprise Value/Ebitda: 4.07
• 1Y Price Target: $276.00
• Price Target Upside: 12.31% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 75 Outperform
• Price Target: $261.00 ▲(6.21%Upside)

AIT's overall stock score reflects its strong financial performance and positive earnings call highlights, including margin expansion and cash generation. The technical analysis and valuation components provide a more moderate outlook, balanced by macroeconomic uncertainties and sector-specific challenges.

Positive Factors

Acquisitions

The acquisition of Hydradyne is expected to contribute significantly to AIT's growth story, with projected sales and EBITDA expected to be accretive to earnings per share.

Earnings

Analyst expects AIT earnings to beat expectations or at least be in line, with shares likely to react positively.

Financial Health

Ample capacity remains for additional mergers and acquisitions, as well as other capital deployment opportunities, indicating strong financial health.

Negative Factors

Market Challenges

Despite positive trends, uncertainty in the fluid power survey suggests potential challenges for AIT.

Sales

Organic daily sales showed a decline, indicating challenges in maintaining sales growth in certain sectors.

Sales Performance

Organic sales were still negative with a weaker December and the first two weeks of January.

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, and Fluid Power & Flow Control. The company distributes bearings, power transmission products, engineered fluid power components and systems, specialty flow control solutions, advanced automation products, industrial rubber products, linear motion components, automation solutions, tools, safety products, oilfield supplies, and other industrial and maintenance supplies; and motors, belting, drives, couplings, pumps, hydraulic and pneumatic components, filtration supplies, valves, fittings, process instrumentation, actuators, and hoses, filtration supplies, as well as other related supplies for general operational needs of customers' machinery and equipment. It also operates fabricated rubber shops and service field crews that install, modify, and repair conveyor belts and rubber linings, as well as offer hose assemblies. In addition, the company provides equipment repair and technical support services. It distributes industrial products through a network of service centers. The company serves various industries, including agriculture and food processing, cement, chemicals and petrochemicals, fabricated metals, forest products, industrial machinery and equipment, life sciences, mining, oil and gas, primary metals, technology, transportation, and utilities, as well as government entities. The company was formerly known as Bearings, Inc. and changed its to name to Applied Industrial Technologies, Inc. in 1997. The company was founded in 1923 and is headquartered in Cleveland, Ohio.

How the Company Makes Money

Applied Industrial Technologies generates revenue primarily through the distribution and sale of industrial products and components, as well as by providing value-added services such as engineering, design, assembly, and maintenance. The company's key revenue streams include product sales, service contracts, and customized solutions tailored to specific customer needs. AIT benefits from strategic partnerships with leading manufacturers and suppliers, allowing it to offer a comprehensive portfolio of high-quality products. Additionally, the company's extensive distribution network and focus on customer service enhance its ability to cross-sell and upsell products and services, contributing to its overall earnings.

Applied Industrial Technologies Financial Statement Overview

Summary

Applied Industrial Technologies displays robust financial health with consistent revenue growth, strong profitability, and excellent cash generation capabilities. The low leverage and high return on equity further strengthen the company's financial position, making it well-positioned for future growth in the industrial distribution sector.

Income Statement

AIT has demonstrated strong financial performance with consistent revenue growth over the years. The Gross Profit Margin stands at 30.04% TTM, showing efficiency in managing production costs. The Net Profit Margin is 8.64% TTM, reflecting effective cost management and profitability. Revenue has grown from $3.23 billion in 2021 to $4.50 billion TTM, indicating robust growth. The EBIT Margin is 11.29% TTM, and the EBITDA Margin is 12.07% TTM, showcasing strong operational efficiency.

Balance Sheet

The company has a solid balance sheet with a Debt-to-Equity ratio of 0.18 TTM, indicating low leverage and financial stability. Return on Equity (ROE) is robust at 12.47% TTM, showcasing strong returns for shareholders. The Equity Ratio is 100%, highlighting a strong equity base and low reliance on debt.

Cash Flow

AIT's cash flow is strong, with a Free Cash Flow growth rate of 26.64% from 2024 to TTM, indicating improved cash generation. The Operating Cash Flow to Net Income Ratio is 1.20 TTM, which is a healthy indicator of cash generation relative to net earnings. The Free Cash Flow to Net Income Ratio is 1.13 TTM, demonstrating effective conversion of profits into cash.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	4.50B	4.48B	4.41B	3.81B	3.24B	3.25B
Gross Profit	1.35B	1.34B	1.29B	1.11B	935.52M	937.74M
EBITDA	542.95M	552.35M	520.39M	410.80M	309.84M	282.86M
Net Income	388.64M	385.76M	346.74M	257.41M	144.76M	24.04M
Balance Sheet
Total Assets	3.12B	2.95B	2.74B	2.45B	2.27B	2.28B
Cash, Cash Equivalents and Short-Term Investments	352.84M	460.62M	344.04M	184.47M	257.75M	268.55M
Total Debt	572.30M	734.94M	622.10M	689.32M	828.38M	933.79M
Total Liabilities	1.29B	1.26B	1.28B	1.30B	1.34B	1.44B
Stockholders Equity	1.83B	1.69B	1.46B	1.15B	932.55M	843.54M
Cash Flow
Free Cash Flow	438.77M	346.53M	317.49M	169.45M	225.84M	276.60M
Operating Cash Flow	464.57M	371.39M	343.97M	187.57M	241.70M	296.71M
Investing Cash Flow	-347.71M	-95.41M	-60.83M	-35.66M	-44.93M	-55.40M
Financing Cash Flow	-146.40M	-156.47M	-126.89M	-223.03M	-213.04M	-78.24M

Applied Industrial Technologies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 245.74
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 245.74 is above the 20-day moving average (MA) of 232.17, above the 50-day MA of 230.33, and above the 200-day MA of 239.28, indicating a bullish trend. The MACD of 3.31 indicates Negative momentum. The RSI at 64.36 is Neutral, neither overbought nor oversold. The STOCH value of 96.16 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AIT.

Applied Industrial Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXPE	79 Outperform	$1.44B	19.08	19.45%	―	11.94%	34.08%
AIT	75 Outperform	$9.36B	24.65	22.23%	0.75%	0.50%	4.48%
WCC	73 Outperform	$9.48B	14.70	14.38%	0.94%	-1.80%	9.55%
MSM	72 Outperform	$4.99B	25.28	14.34%	3.79%	-4.11%	-31.26%
Sector *	67 Neutral	€8.39B	18.63	6.19%	2.67%	2.39%	-39.55%
DSGR	65 Neutral	$1.35B	1,808.07	0.18%	―	13.91%	―
TITN	52 Neutral	$498.63M	11.08	-9.38%	―	-5.32%	-163.42%

Applied Industrial Technologies Corporate Events

Applied Industrial Technologies Completes Acquisition of Hydradyne

Applied Industrial Technologies announced the completion of its acquisition of Hydradyne, LLC, a provider of fluid power solutions, enhancing its distribution position in the U.S. The acquisition is expected to contribute significantly to Applied’s sales and EBITDA, with anticipated growth and operational momentum, and will be accretive to EPS within the first year.