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Applied Industrial Technologies (AIT)
NYSE:AIT
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Applied Industrial Technologies
(NYSE:AIT)
Rating:72Outperform
Price Target:
$249.00
▲( 11.54% Upside)
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 Performance
Organic sales were still negative with a weaker December and the first two weeks of January.
Sales
Organic daily sales showed a decline, indicating challenges in maintaining sales growth in certain sectors.
Applied Industrial Technologies (AIT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.74B
Dividend Yield0.7%
Average Volume (3M)446.94K
Price to Earnings (P/E)23.0
Beta (1Y)1.10
Revenue Growth0.50%
EPS Growth4.48%
CountryUS
Employees6,818
SectorIndustrials
Sector Strength90
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)2.57
Shares Outstanding38,084,640
10 Day Avg. Volume451,476
30 Day Avg. Volume446,937
Financial Highlights & Ratios
PEG Ratio25.69
Price to Book (P/B)4.91
Price to Sales (P/S)0.00
P/FCF Ratio20.28
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue0.51
Enterprise Value/Gross Profit6.75
Enterprise Value/Ebitda4.18
Forecast
1Y Price Target
$276.00Price Target Upside23.63% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Applied Industrial Technologies Business Overview & Revenue Model
Company DescriptionApplied 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 MoneyApplied Industrial Technologies generates revenue primarily through the sale of industrial parts and supplies. The company operates through two main segments: Service Center Based Distribution and Fluid Power & Flow Control. In the Service Center Based Distribution segment, AIT provides a wide variety of industrial products, including bearings, power transmission products, and other maintenance supplies, directly to industrial customers. The Fluid Power & Flow Control segment focuses on the sale and service of hydraulic and pneumatic components and systems. Additionally, AIT offers value-added services like engineering, design, and systems integration which enhance its product offerings and create additional revenue streams. The company also benefits from strategic partnerships with leading manufacturers and suppliers, which help expand its product portfolio and market reach.
Applied Industrial Technologies Financial Statement Overview
Summary
Applied Industrial Technologies showcases strong financial health with robust revenue growth, high profitability margins, and excellent cash generation capabilities. The low leverage and high return on equity further strengthen its financial position.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.85
Very Positive
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.78
Positive
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.82
Very Positive
| 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 | EBIT |
| 507.99M | 495.82M | 473.15M | 357.86M | 205.45M | 222.77M | EBITDA |
| 542.95M | 552.35M | 520.39M | 410.80M | 309.84M | 282.86M | Net Income Common Stockholders |
| 388.64M | 385.76M | 346.74M | 257.41M | 144.76M | 24.04M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 352.84M | 460.62M | 344.04M | 184.47M | 257.75M | 268.55M | Total Assets |
| 3.12B | 2.95B | 2.74B | 2.45B | 2.27B | 2.28B | Total Debt |
| 572.30M | 734.94M | 622.10M | 689.32M | 828.38M | 933.79M | Net Debt |
| 219.46M | 274.33M | 278.06M | 504.85M | 570.63M | 665.24M | 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
Negative
223.24
Price Trends
226.44
Negative
238.22
Negative
234.81
Negative
Market Momentum
0.02
Positive
45.89
Neutral
32.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIT, the sentiment is Negative. The current price of 223.24 is below the 20-day moving average (MA) of 229.44, below the 50-day MA of 226.44, and below the 200-day MA of 234.81, indicating a bearish trend. The MACD of 0.02 indicates Positive momentum. The RSI at 45.89 is Neutral, neither overbought nor oversold. The STOCH value of 32.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AIT.
Applied Industrial Technologies Risk Analysis
Applied Industrial Technologies disclosed 19 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
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $1.31B | 17.39 | 19.45% | ― | 11.94% | 34.08% | |
75 Outperform | $8.39B | 13.00 | 14.38% | 1.02% | -1.80% | 9.55% | |
72 Outperform | $8.74B | 23.01 | 22.23% | 0.70% | 0.50% | 4.48% | |
69 Neutral | $4.53B | 21.38 | 15.53% | 4.16% | -5.71% | -31.93% | |
65 Neutral | $1.25B | 1,677.02 | 0.18% | ― | 13.91% | ― | |
64 Neutral | $4.39B | 11.81 | 5.17% | 249.38% | 3.98% | -12.17% | |
46 Neutral | $476.26M | 11.08 | -5.81% | ― | -2.04% | -133.17% |
* Industrials Sector Average
Performance Comparison
AIT
Applied Industrial Technologies
223.24
29.04
14.95%
DXPE
DXP Enterprises
83.60
32.19
62.61%
DSGR
Distribution Solutions Group
27.00
-9.08
-25.17%
MSM
MSC Industrial
79.06
-5.84
-6.88%
TITN
Titan Machinery
20.13
0.38
1.92%
WCC
Wesco International
165.84
-18.92
-10.24%
Applied Industrial Technologies Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q3-2025)
| % Change Since: -8.05%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call highlights strong margin expansion, record cash generation, and successful M&A activity. However, it acknowledges challenges in organic sales decline, market conditions, and macroeconomic uncertainty. Positive order trends and share repurchase plans provide optimism for future growth.Q3-2025 Updates
Positive Updates
Strong Margin Expansion
Gross margins and EBITDA margins exceeded expectations, increasing 95 and 59 basis points respectively over the prior year.
Record Cash Generation
Free cash flow increased by 50% year-over-year in the third quarter, with a 39% increase year-to-date.
Successful M&A Activity
Significant capital deployment of $440 million, including the acquisition of Hydradyne and the announced acquisition of IRIS Factory Automation.
Positive Order Trends
Engineered Solutions segment saw a 3% year-over-year and 8% sequential increase in orders, with automation orders up over 30% year-over-year.
Share Repurchase Program
Repurchased over 330,000 shares for approximately $80 million year-to-date and announced a new $1.5 million share repurchase authorization.
Negative Updates
Organic Sales Decline
Third-quarter organic sales declined by 3%, with continued softness in the OEM fluid power markets.
Challenging Market Conditions
Ongoing muted end market backdrop with customers conservatively managing MRO and capital spending.
Macroeconomic Uncertainty
Economic uncertainty due to evolving global trade policies and potential tariffs affecting customer spending.
Sector-Specific Weakness
Continued sales declines in machinery, metals, and utilities markets.
Company Guidance
During the Fiscal 2025 Third Quarter Earnings Call for Applied Industrial Technologies, the company provided guidance indicating a cautious outlook amid ongoing economic uncertainty. The company adjusted its full-year fiscal 2025 guidance, projecting EPS in the range of $9.85 to $10 and sales growth between flat to 1%. This includes an anticipated organic sales decline of 4% to 3% and EBITDA margins of 12.3% to 12.4%. In the third quarter, gross margins exceeded expectations, increasing by 95 basis points year-over-year, while EBITDA margins rose by 59 basis points. The company achieved free cash flow growth of 50% year-over-year in the third quarter and 39% year-to-date, supported by solid working capital management and cost control initiatives. The guidance reflects potential impacts from global trade uncertainties and customer caution in capital spending, with expectations of a mid to low single-digit decline in organic daily sales for the fourth quarter. Despite these challenges, Applied Industrial Technologies remains focused on leveraging its strategic initiatives and strong market position for long-term growth.Applied Industrial Technologies Corporate Events
M&A Transactions
Applied Industrial Technologies Completes Acquisition of Hydradyne
Positive
Jan 2, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.