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Timken Company (TKR)
NYSE:TKR

Timken Company (TKR) AI Stock Analysis

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TK

Timken Company

(NYSE:TKR)

Rating:74Outperform
Price Target:
$80.00
▲(6.04%Upside)
Timken's overall stock score is supported primarily by its stable financial performance and strong cash flow management. While technical analysis shows some positive momentum, valuation metrics indicate a fair price. The earnings call highlighted both strengths in cost management and challenges in revenue growth and tariff impacts. The balanced assessment results in a moderately positive outlook.
Positive Factors
Growth Areas
The company is positioned in secular growth areas like automation and robotics, providing incremental upside to earnings.
Portfolio Transformation
The company's strategic portfolio changes have improved earnings stability and margin structure.
Negative Factors
CEO Transition
The abrupt change in CEO and return of Rich Kyle is a temporary solution, likely limiting potential for meaningful strategic news.
Tariff Risks
Tariffs pose a risk to margin performance for Timken due to their contract-based exposure to OEMs.

Timken Company (TKR) vs. SPDR S&P 500 ETF (SPY)

Timken Company Business Overview & Revenue Model

Company DescriptionThe Timken Company (TKR) is a global industrial leader specializing in engineered bearings and power transmission products. With a rich history dating back to 1899, Timken operates in sectors such as automotive, aerospace, construction, mining, agriculture, and power generation. The company's core products include a wide range of bearings, gear drives, belts, chains, couplings, and lubrication systems, which are essential components in reducing friction and improving efficiency in machinery and equipment.
How the Company Makes MoneyTimken generates revenue primarily through the manufacture and sale of its engineered bearings and power transmission products. The company's revenue streams are diversified across several key industries including automotive, aerospace, and industrial sectors, where demand for reliable and high-performance components is high. Timken also engages in aftermarket sales, providing replacement parts and maintenance services, which contribute to a recurring revenue stream. Significant partnerships and acquisitions have also bolstered Timken's market position and expanded its product offerings, enhancing its ability to meet the needs of a global customer base. Timken's financial performance is influenced by factors such as industrial production levels, economic conditions, and technological advancements in manufacturing processes, all of which can impact demand for its products and services.

Timken Company Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 16.13%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a cautious sentiment, with some positive aspects such as strong performance in Asia and effective cost management. However, significant challenges included declining organic revenue, the impact of tariffs, and lower adjusted EBITDA and EPS, leading to a more balanced overall view.
Q1-2025 Updates
Positive Updates
Strong Performance in Asia
Sales in Asia were up 10%, led by growth in China with significant improvement in renewable energy demand, which contributed positively to overall results.
Successful Cost Management
The company reaffirmed its commitment to deliver $75 million of cost savings in 2025, which is expected to offset inflation in labor and other input costs.
Improved Free Cash Flow
Timken generated higher free cash flow compared to the prior year, indicating strong cash management despite lower earnings.
Commitment to Shareholder Value
The company returned $48 million to shareholders through dividends and share repurchases, demonstrating a focus on shareholder value.
Negative Updates
Decline in Organic Revenue
Organic revenue was down 3% from last year due to lower demand in Europe and the Americas.
Impact of Tariffs
The company expects a net direct impact from tariffs of around $25 million in 2025, affecting earnings and causing a cautious outlook on market demand.
Lower Adjusted EBITDA and EPS
Adjusted EBITDA margins were 18.2% compared to 20.7% last year, and adjusted EPS was $1.40, down from $1.77 last year, due to lower volumes and higher manufacturing costs.
Challenges in Europe
Sales in EMEA were down 11% due to industrial softness in Western Europe, with significant declines in sectors like general and heavy industrial automation and auto truck.
Company Guidance
During the first quarter of 2025, Timken reported sales of over $1.1 billion, reflecting an organic revenue decline of approximately 3% from the previous year. The company's adjusted EBITDA margin was 18.2%, and adjusted earnings per share stood at $1.40, both below the prior year's figures primarily due to lower volumes, higher manufacturing costs, and unfavorable mix. Timken's total backlog experienced a low single-digit increase compared to the fourth quarter, signaling stabilization in end-market demand. The company faced a $25 million net direct impact from tariffs, with plans to fully offset this cost by year-end through repricing strategies. Despite these challenges, Timken reaffirmed its commitment to deliver $75 million in cost savings for the year and reported higher free cash flow compared to the previous year, ending the quarter with a solid balance sheet. The updated 2025 outlook anticipates a challenging industrial market, with organic sales expected to decline by 1% at the midpoint.

Timken Company Financial Statement Overview

Summary
The company's financial performance is solid, with strong cash flow metrics and moderate profitability margins. Despite a slight decline in revenue, the company maintains balanced leverage and efficient cash flow management, indicating stable financial health.
Income Statement
75
Positive
The company's income statement shows strong profitability with a gross profit margin of 47.89% and an EBIT margin of 12.72% in TTM. However, there is a slight decline in revenue compared to the previous year, leading to a revenue growth rate of -1.09%. The net profit margin stands at 7.53%, indicating stable profitability but with room for improvement.
Balance Sheet
70
Positive
The balance sheet reflects a moderate financial position with a debt-to-equity ratio of 0.72, indicating a balanced leverage. The equity ratio is 47.03%, showing a fair proportion of equity in the total asset structure. Return on equity (ROE) is 11.03%, highlighting reasonable returns on shareholders' investments.
Cash Flow
80
Positive
Cash flow metrics are robust, with a free cash flow to net income ratio of 0.95, indicating efficient conversion of earnings into cash. The operating cash flow to net income ratio is 1.42, underscoring solid cash generation capacity. Free cash flow growth is positive at 5.95%, signaling strong cash flow management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.52B4.57B4.77B4.50B4.13B3.51B
Gross Profit1.38B1.44B1.44B1.29B1.10B1.01B
EBITDA744.00M841.10M842.50M822.60M703.20M631.00M
Net Income327.50M352.70M394.10M407.40M369.10M284.50M
Balance Sheet
Total Assets6.57B6.41B6.54B5.77B5.17B5.04B
Cash, Cash Equivalents and Short-Term Investments376.10M373.20M418.90M331.60M257.10M320.30M
Total Debt2.25B2.18B2.50B2.03B1.54B1.67B
Total Liabilities3.48B3.43B3.84B3.42B2.79B2.82B
Stockholders Equity2.92B2.83B2.58B2.27B2.29B2.15B
Cash Flow
Free Cash Flow323.90M305.70M357.40M285.40M239.00M456.00M
Operating Cash Flow485.00M475.70M545.20M463.80M387.30M577.60M
Investing Cash Flow-312.60M-304.60M-806.50M-573.30M-173.80M-153.50M
Financing Cash Flow-210.40M-194.80M347.10M206.80M-269.30M-331.10M

Timken Company Technical Analysis

Technical Analysis Sentiment
Positive
Last Price75.44
Price Trends
50DMA
69.54
Positive
100DMA
71.45
Positive
200DMA
74.56
Positive
Market Momentum
MACD
1.07
Negative
RSI
64.26
Neutral
STOCH
67.72
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TKR, the sentiment is Positive. The current price of 75.44 is above the 20-day moving average (MA) of 72.04, above the 50-day MA of 69.54, and above the 200-day MA of 74.56, indicating a bullish trend. The MACD of 1.07 indicates Negative momentum. The RSI at 64.26 is Neutral, neither overbought nor oversold. The STOCH value of 67.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TKR.

Timken Company Risk Analysis

Timken Company disclosed 29 risk factors in its most recent earnings report. Timken Company reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Timken Company Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$6.03B28.316.93%-4.01%-8.86%
CSCSW
74
Outperform
$4.87B34.6016.19%0.33%10.41%34.56%
TKTKR
74
Outperform
$5.28B16.2811.85%1.93%-3.69%-11.76%
73
Outperform
$7.03B367.781.45%7.32%
73
Outperform
$5.76B28.3011.61%0.64%4.50%9.90%
HXHXL
68
Neutral
$4.60B37.717.87%1.20%5.37%29.15%
65
Neutral
$10.65B15.495.57%1.97%2.71%-26.32%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TKR
Timken Company
75.44
-3.07
-3.91%
HXL
Hexcel
57.15
-7.10
-11.05%
KTOS
Kratos Defense
43.07
22.59
110.30%
MOG.A
Moog
182.52
13.14
7.76%
CSW
CSW Industrials
289.97
22.08
8.24%
GTES
Gates Industrial
23.38
7.69
49.01%

Timken Company Corporate Events

Executive/Board Changes
Timken Company Appoints Richard G. Kyle as Interim CEO
Neutral
Mar 31, 2025

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.

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.Date of analysis: Jun 24, 2025