Timken Company (TKR) AI Stock Analysis

• Market Cap: $4.34B
• Dividend Yield: 2.2%
• Average Volume (3M): 804.12K
• Price to Earnings (P/E): 12.4
• Beta (1Y): 1.05
• Revenue Growth: -4.11%
• EPS Growth: -8.74%
• Country: US
• Employees: 19,000
• Sector: Industrials
• Sector Strength: 68
• Industry: Manufacturing - Tools & Accessories
• EPS (TTM): 4.98
• Shares Outstanding: 70,175,026
• 10 Day Avg. Volume: 1,289,766
• 30 Day Avg. Volume: 804,123
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.14
• Price to Cash Flow (P/CF): 7.30
• P/FCF Ratio: 9.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $85.38
• Price Target Upside: 37.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Timken maintains a robust financial position with effective cost management and a balanced financial structure. However, declining revenues and profitability highlight the need for strategic adjustments. The stock's technical indicators suggest caution, while moderate valuation and proactive corporate strategies offer potential upside.

Positive Factors

Cost Management

TKR will continue to execute on their cost programs, which should provide some earnings tailwind.

Leadership Stability

The return of Rich Kyle as interim President and CEO should provide some confidence that a steady hand is at the wheel.

Negative Factors

Earnings Guidance

The 2025 EPS guidance is well below expectations, which indicates challenges in meeting market forecasts.

Market Sentiment

Sentiment has deteriorated as PMIs have turned negative, raw materials prices are up, and OEMs have turned more cautious on expectations that tariffs will hurt demand growth.

Tariff Impact

Tariffs pose a risk to margin performance for Timken given their contract-based exposure to OEMs.

Timken Company Business Overview & Revenue Model

Company Description

The Timken Company designs, manufactures, and manages engineered bearings and power transmission products worldwide. It operates in two segments, Mobile Industries and Process Industries. The Mobile Industries segment offers a portfolio of bearings, seals, and lubrication devices and systems, as well as power transmission components, engineered chains, augers, belts, couplings, clutches, brakes, and related products and maintenance services to original equipment manufacturers (OEMs) and end-users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment, and power sports markets; and on-highway vehicles, including passenger cars, light trucks, and medium- and heavy-duty trucks, as well as rail cars and locomotives. It also provides power transmission systems and flight-critical components for civil and military aircraft, which include bearings, rotor-head assemblies, helicopter transmission systems, turbine engine components, gears, and housings. This segment sells its parts through a network of authorized automotive and heavy-truck distributors to individual end-users, equipment owners, operators, and maintenance shops. The Process Industries segment provides industrial bearings and assemblies; power transmission components, such as gears and gearboxes; and linear motion products, couplings, seals, lubricants, chains, belts, and related products and services to OEMs and end-users in various industries. It also offers aftermarket sales and service needs through a network of authorized industrial distributors; and repair and service for bearings and gearboxes, as well as electric motor rewind, repair, and services to end-users. The company offers its products under the Timken, Philadelphia Gear, Drives, Cone Drive, Rollon, Lovejoy, Diamond, BEKA, and Groeneveld brands. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.

How the Company Makes Money

Timken Company generates revenue primarily through the sale of bearings and power transmission products across various industries. Its key revenue streams include the original equipment manufacturer (OEM) market, where Timken supplies products directly to manufacturers, and the aftermarket sector, which involves providing replacement parts and maintenance services. Significant partnerships with global industrial and automotive companies, as well as a strong distribution network, contribute to its earnings. Timken's focus on innovation and quality, along with strategic acquisitions to expand its product portfolio and market reach, also play a vital role in its financial performance.

Timken Company Financial Statement Overview

Summary

Timken Company shows solid financial health with a stable balance sheet and income statement performance. Despite minor fluctuations in profitability metrics, the company maintains operational efficiency. However, the decline in free cash flow suggests a need for improved cash flow management.

Income Statement

The company's gross profit margin for TTM is 47.50%, indicating efficient cost management. However, the net profit margin decreased to 7.80% from 8.26% in the previous year, showing a slight decline in profitability. Revenue growth has been inconsistent, with a decrease of 4.11% from the previous year. EBIT and EBITDA margins are stable at 13.47% and 17.09% respectively, reflecting good operational performance.

Balance Sheet

The debt-to-equity ratio is 0.72, indicating moderate leverage. Return on equity (ROE) is solid at 11.95%, suggesting effective use of equity to generate profits. The equity ratio is 46.56%, which shows a balanced financial structure. The company maintains stability with increasing stockholders' equity over the years.

Cash Flow

Free cash flow decreased by 14.51% compared to the previous year, which could impact future investments. The operating cash flow to net income ratio is 1.33, indicating that operating cash flows cover net income comfortably. However, the free cash flow to net income ratio dropped to 0.86, suggesting less efficiency in converting profits into free cash flow.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.57B	4.77B	4.50B	4.13B	3.51B
	Gross Profit
1.44B	1.44B	1.29B	1.10B	1.01B
	EBIT
611.10M	657.10M	606.90M	513.10M	454.90M
	EBITDA
841.10M	842.50M	822.60M	703.20M	631.00M
	Net Income Common Stockholders
352.70M	394.10M	407.40M	369.10M	284.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
373.20M	418.90M	331.60M	257.10M	320.30M
	Total Assets
6.41B	6.54B	5.77B	5.17B	5.04B
	Total Debt
2.18B	2.50B	2.03B	1.54B	1.67B
	Net Debt
1.81B	2.08B	1.70B	1.29B	1.35B
	Total Liabilities
3.43B	3.84B	3.42B	2.79B	2.82B
	Stockholders Equity
2.83B	2.58B	2.27B	2.29B	2.15B
Cash Flow		Free Cash Flow
305.70M	357.40M	285.40M	239.00M	456.00M
	Operating Cash Flow
475.70M	545.20M	463.80M	387.30M	577.60M
	Investing Cash Flow
-304.60M	-806.50M	-573.30M	-173.80M	-153.50M
	Financing Cash Flow
-194.80M	347.10M	206.80M	-269.30M	-331.10M

Timken Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 62.05
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TKR, the sentiment is Negative. The current price of 62.05 is below the 20-day moving average (MA) of 67.93, below the 50-day MA of 74.46, and below the 200-day MA of 77.95, indicating a bearish trend. The MACD of -4.08 indicates Positive momentum. The RSI at 37.17 is Neutral, neither overbought nor oversold. The STOCH value of 43.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TKR.

Timken Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GTES	72 Outperform	$4.44B	23.37	6.26%	―	-4.54%	-13.20%
CSWI	71 Outperform	$5.02B	35.73	16.33%	0.30%	10.41%	34.56%
MOG.A	70 Neutral	$5.22B	25.17	12.07%	0.68%	7.22%	22.61%
HXL	65 Neutral	$4.24B	33.15	8.14%	1.18%	6.31%	28.25%
Sector *	63 Neutral	$4.29B	11.05	5.73%	232.30%	4.75%	-5.69%
TKR	62 Neutral	$4.34B	12.41	13.04%	2.20%	-4.11%	-8.74%
KTOS	59 Neutral	$5.06B	309.19	1.40%	―	9.57%	―

Timken Company Corporate Events

Timken Company Appoints Richard G. Kyle as Interim CEO

On March 31, 2025, The Timken Company announced the mutual agreement for Tarak B. Mehta to depart as President and CEO, with Richard G. Kyle appointed as interim President and CEO. Kyle, who previously served as CEO from 2014 to 2024, will receive a compensation package including a $1.2 million salary and stock awards. Mehta’s departure was not due to misconduct, and he will receive a $9.25 million settlement.

Timken Company Faces Sales Decline, Plans Cost Reductions

Timken reported a decrease in fourth-quarter and full-year 2024 sales, primarily due to lower demand in Europe and unfavorable currency impacts, despite benefits from acquisitions. The company’s net income margin improved in the fourth quarter, and it maintained strong cash flow, while setting a conservative 2025 outlook with anticipated cost reduction measures to support margins and generate higher free cash flow.

Timken Company Expands Board, Elects New Director

On January 21, 2025, the Timken Company expanded its Board of Directors from twelve to thirteen members and elected Kimberly K. Ryan as a director. Ms. Ryan, who is the President and CEO of Hillenbrand, Inc., will also serve on the Audit and Compensation Committees. This move signifies Timken’s commitment to strengthening its leadership team, potentially impacting its strategic direction and governance practices.