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Applied Industrial Technologies (AIT)
NYSE:AIT

Applied Industrial Technologies (AIT) AI Stock Analysis

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Applied Industrial Technologies

(NYSE:AIT)

76Outperform
Applied Industrial Technologies earns a solid score due to its strong financial performance and effective cash management, supported by positive earnings growth and strategic acquisitions. However, mixed technical indicators, fair valuation, and challenges in sales performance limit the score. The earnings call highlighted both strengths and risks, resulting in a cautious yet optimistic outlook.
Positive Factors
Acquisitions and Growth
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 Performance
Analyst expects AIT earnings to beat expectations or at least be in line, with shares likely to react positively.
Market and Industry Trends
Positive trends in the fluid power survey, which is strongly related to AIT's topline, support a positive outlook despite uncertainty.
Negative Factors
Organic Sales
Organic sales were still negative with a weaker December and the first two weeks of January.
Sales Performance
Organic daily sales showed a decline, indicating challenges in maintaining sales growth in certain sectors.

Applied Industrial Technologies (AIT) vs. S&P 500 (SPY)

Applied Industrial Technologies Business Overview & Revenue Model

Company DescriptionApplied Industrial Technologies (AIT) is a leading distributor and solutions provider in the industrial sector, specializing in the distribution of bearings, power transmission components, fluid power products, and other industrial supplies. The company serves a diverse range of industries including manufacturing, energy, automotive, and aerospace, offering both products and comprehensive services such as inventory management and technical support.
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 exhibits strong financial health across income, balance sheet, and cash flow statements. The company benefits from growing revenues, improving profit margins, and sound debt management. While leverage remains a consideration, its operational efficiency and cash generation are commendable, positioning it well within the industrial equipment distribution industry.
Income Statement
88
Very Positive
Applied Industrial Technologies demonstrates strong profitability with a consistent increase in gross profit and net profit margins. The revenue growth shows a positive trajectory, with a significant increase from 2022 to 2024. EBIT and EBITDA margins also indicate efficient operations, contributing to a robust income statement.
Balance Sheet
80
Positive
The balance sheet reflects a solid equity base, with a favorable debt-to-equity ratio indicating manageable leverage. Return on Equity has been improving, showcasing efficient use of shareholder capital. The equity ratio is healthy, suggesting stability in asset financing. However, total liabilities are relatively high compared to assets.
Cash Flow
85
Very Positive
The cash flow statement shows strong operating cash flows relative to net income, indicating good earnings quality. Free cash flow has grown substantially, supporting reinvestment and debt repayment. The company maintains positive free cash flow to net income ratios, underscoring effective cash management.
Breakdown
Jun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
4.48B4.41B3.81B3.24B3.25B
Gross Profit
1.34B1.29B1.11B935.52M937.74M
EBIT
495.82M473.15M357.86M205.45M222.77M
EBITDA
552.35M520.39M410.80M309.84M282.86M
Net Income Common Stockholders
385.76M346.74M257.41M144.76M24.04M
Balance SheetCash, Cash Equivalents and Short-Term Investments
460.62M344.04M184.47M257.75M268.55M
Total Assets
2.95B2.74B2.45B2.27B2.28B
Total Debt
734.94M622.10M689.32M828.38M933.79M
Net Debt
274.33M278.06M504.85M570.63M665.24M
Total Liabilities
1.26B1.28B1.30B1.34B1.44B
Stockholders Equity
1.69B1.46B1.15B932.55M843.54M
Cash FlowFree Cash Flow
346.53M317.49M169.45M225.84M276.60M
Operating Cash Flow
371.39M343.97M187.57M241.70M296.71M
Investing Cash Flow
-95.41M-60.83M-35.66M-44.93M-55.40M
Financing Cash Flow
-156.47M-126.89M-223.03M-213.04M-78.24M

Applied Industrial Technologies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price243.28
Price Trends
50DMA
231.19
Positive
100DMA
243.68
Negative
200DMA
233.65
Positive
Market Momentum
MACD
2.71
Negative
RSI
59.56
Neutral
STOCH
93.22
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 243.28 is above the 20-day moving average (MA) of 225.65, above the 50-day MA of 231.19, and above the 200-day MA of 233.65, indicating a bullish trend. The MACD of 2.71 indicates Negative momentum. The RSI at 59.56 is Neutral, neither overbought nor oversold. The STOCH value of 93.22 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 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$1.24B18.7117.54%7.35%9.35%
AIAIT
76
Outperform
$9.34B24.6322.70%0.65%0.37%3.52%
WCWCC
75
Outperform
$7.91B12.4314.34%1.05%-2.53%-4.03%
MSMSM
72
Outperform
$4.26B20.1315.53%4.36%-5.71%-31.93%
63
Neutral
$4.23B11.545.34%209.77%4.14%-9.49%
63
Neutral
$1.23B760.60-1.13%14.88%9.87%
46
Neutral
$391.76M11.08-5.81%-2.04%-133.17%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AIT
Applied Industrial Technologies
243.28
63.89
35.62%
DXPE
DXP Enterprises
88.46
38.79
78.10%
DSGR
Distribution Solutions Group
26.04
-6.28
-19.43%
MSM
MSC Industrial
76.48
-10.66
-12.23%
TITN
Titan Machinery
16.59
-5.22
-23.93%
WCC
Wesco International
162.96
10.10
6.61%

Applied Industrial Technologies Earnings Call Summary

Earnings Call Date:Jan 29, 2025
(Q2-2025)
|
% Change Since: -3.38%|
Next Earnings Date:May 01, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with significant achievements such as EBITDA and EPS growth, successful acquisition, and dividend increase. However, challenges in sales performance, particularly in December and January, and mixed end market demand tempered the overall positive sentiment.
Q2-2025 Updates
Positive Updates
EBITDA and EPS Growth
EBITDA and EPS exceeded expectations, increasing approximately 3% and 7% over the prior year, respectively, driven by strong gross margin performance and cost controls.
Engineered Solutions Segment Margin Expansion
EBITDA margins in the Engineered Solutions segment expanded by 115 basis points over the prior year, exceeding 16% for the first time.
Hydradyne Acquisition
The strategic acquisition of Hydradyne, with anticipated sales of $260 million and EBITDA of $30 million in the first year, strengthens Applied Industrial Technologies' fluid power position.
Dividend Increase
The company announced a 24% increase in its quarterly dividend, reflecting strong earnings and cash generation.
Negative Updates
Sales Decline and Market Challenges
Average daily sales declined 3.4% over the prior year, with mixed end market demand and customers managing MRO spending conservatively.
Soft Organic Sales Growth in December
Softer sales during the last two weeks of December negatively impacted the quarter's overall organic sales growth by approximately 100 basis points.
January Sales Trends
January sales are currently trending down a mid-single-digit percent year-over-year on an organic basis, with ongoing macro policy and interest rate uncertainty as headwinds.
Company Guidance
During the Fiscal 2025 Second Quarter Earnings Call for Applied Industrial Technologies, the company provided guidance that projected sales growth of 1% to 3% for the full fiscal year, with an updated EPS range of $9.65 to $10.05. EBITDA margins were expected to be between 12.2% and 12.4%. The company reported that the second quarter EBITDA and EPS exceeded expectations, growing approximately 3% and 7% year-over-year, respectively. Gross margin expanded 114 basis points to 30.6%, driven by strong channel execution and ongoing margin initiatives. The company also highlighted the positive impact of its recent acquisition of Hydradyne, expected to contribute $260 million in sales and $30 million in EBITDA within the first year of ownership. Despite a mid-single-digit decline in January sales, Applied Industrial Technologies remained optimistic about the demand outlook, supported by improving order trends in its Engineered Solutions segment.

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.