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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on AIT

Applied Industrial Technologies' recent performance was positively driven by strong Q4 earnings, beating estimates with $2.8 per share, up from $2.64 a year ago. Growth in Engineered Solutions and strategic acquisitions offset headwinds in distribution and Service Center operations. International sales contribute significantly to revenue, with a growing reliance on these markets. The company's automation solutions also drove revenue gains. AIT's Q4 results reflect a solid operational performance, with a favorable outlook. (Source: Q4 earnings report)

1.c. Company Highlights

2. Applied Companies Beats Earnings Expectations with Strong Sales Growth

The company's financial performance for the second quarter was in line with guidance, despite higher-than-expected LIFO expense and seasonally weak sales activity in December. Consolidated sales increased 8.4% over the prior year quarter, with acquisitions contributing 6 points of growth and foreign currency translation providing a positive 20 basis point impact. Organic sales grew 2.2% year-over-year, with an estimated 250 basis point contribution from product pricing. The reported earnings per share (EPS) of $2.51 beat estimates of $2.48. Gross margin of 30.4% was down 19 basis points from the prior year level, primarily due to higher-than-expected LIFO expense. EBITDA margins of 12.1% were within the guidance range.

Publication Date: Feb -10

📋 Highlights

Segment Performance

The service center segment sales increased 2.9% year-over-year on an organic basis, driven by price contribution and growth across both national and local account base. Engineered solutions segment sales increased 19.1% over the prior year, with acquisitions contributing 18.6 points of growth. On an organic basis, segment sales increased 5% year-over-year, driven by price contribution and modest volume growth. Automation business sales increased 3% on an organic basis over the prior year, representing the third quarter of positive organic growth.

Guidance and Outlook

The company adjusted its full-year fiscal 2026 EPS guidance to $10.45 to $10.75, based on sales growth above 5.5 to 7% and EBITDA margins of 12.2 to 12.4%. The updated guidance assumes LIFO expense of $24 to $26 million, compared to prior guidance of $14 million to $18 million. Analysts estimate next year's revenue growth at 5.3%, indicating a moderate growth trajectory. With a current P/E Ratio of 26.35 and EV/EBITDA of 17.77, the market is pricing in a relatively high valuation, potentially reflecting the company's strong growth prospects and profitability, as indicated by an ROE of 21.74% and ROIC of 15.62%.

Valuation and Dividend Yield

The company's dividend yield stands at 0.65%, which, while not exceptionally high, is a positive aspect for income investors. The Free Cash Flow Yield of 4.29% is more attractive, suggesting that the company generates sufficient cash to potentially support further dividend increases or share buybacks, as evidenced by the $143 million spent on repurchases year-to-date.

3. NewsRoom

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AIT Worldwide Logistics Announces Strategic Partnership With Greenbriar Equity Group

Feb -16

Source: businesswire.com

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Insider Selling: Applied Industrial Technologies (NYSE:AIT) VP Sells $1,568,027.89 in Stock

Feb -09

Source: defenseworld.net

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Insider Selling: Applied Industrial Technologies (NYSE:AIT) VP Sells $1,154,480.00 in Stock

Feb -09

Source: defenseworld.net

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Alps Advisors Inc. Grows Holdings in Applied Industrial Technologies, Inc. $AIT

Feb -09

Source: defenseworld.net

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Neil Schrimsher Sells 19,207 Shares of Applied Industrial Technologies (NYSE:AIT) Stock

Feb -08

Source: defenseworld.net

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Federated Hermes Inc. Reduces Position in Applied Industrial Technologies, Inc. $AIT

Jan -29

Source: defenseworld.net

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Applied Industrial Q2 Earnings Surpass Estimates, Revenues Miss

Jan -28

Source: zacks.com

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Applied Industrial Technologies Q2 Earnings Call Highlights

Jan -28

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.83%)

6. Segments

Service Center Based Distribution

Expected Growth: 3.5%

Applied Industrial Technologies' Service Center Based Distribution segment growth of 3.5% is driven by increasing demand for MRO (Maintenance, Repair, and Operations) products, expansion of service centers, and strategic acquisitions. Additionally, the company's focus on digitalization, e-commerce platform, and value-added services also contribute to the growth.

Engineered Solutions

Expected Growth: 4.5%

Applied Industrial Technologies' Engineered Solutions segment growth of 4.5% is driven by increasing demand for industrial automation and robotics, expansion in e-commerce and logistics, and growing need for energy-efficient solutions. Additionally, strategic acquisitions and investments in digital technologies have enhanced the company's capabilities, contributing to the segment's growth.

7. Detailed Products

Bearings

Applied Industrial Technologies offers a wide range of bearings, including ball bearings, roller bearings, and mounted bearings, for various industrial applications.

Power Transmission

The company provides power transmission products, including belts, chains, gears, and couplings, to transmit power and motion in industrial machinery.

Fluid Power

Applied Industrial Technologies offers a range of fluid power products, including hydraulic and pneumatic components, to control and transmit fluid power in industrial systems.

Automation

The company provides automation products, including sensors, actuators, and control systems, to automate industrial processes and improve efficiency.

MRO Supplies

Applied Industrial Technologies offers a range of MRO (Maintenance, Repair, and Operations) supplies, including fasteners, adhesives, and lubricants, for industrial maintenance and repair.

Engineering Services

The company provides engineering services, including design, installation, and maintenance, to support industrial automation and optimization projects.

8. Applied Industrial Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Applied Industrial Technologies, Inc. faces moderate threat from substitutes due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Applied Industrial Technologies, Inc.'s products and services, which limits the ability of customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers in the market, but Applied Industrial Technologies, Inc.'s large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the industry, including the need for significant capital investment and specialized expertise.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to intense competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 29.90%
Debt Cost 5.17%
Equity Weight 70.10%
Equity Cost 9.43%
WACC 8.16%
Leverage 42.65%

11. Quality Control: Applied Industrial Technologies, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
MSC Industrial Direct Co

A-Score: 6.0/10

Value: 4.0

Growth: 3.7

Quality: 6.0

Yield: 8.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Applied Industrial Technologies

A-Score: 5.3/10

Value: 3.1

Growth: 7.1

Quality: 7.2

Yield: 2.0

Momentum: 4.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Watsco

A-Score: 5.2/10

Value: 3.1

Growth: 6.8

Quality: 7.1

Yield: 6.0

Momentum: 1.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
WESCO

A-Score: 5.0/10

Value: 4.5

Growth: 7.8

Quality: 3.9

Yield: 1.0

Momentum: 8.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Pool

A-Score: 4.7/10

Value: 3.6

Growth: 6.8

Quality: 6.1

Yield: 3.0

Momentum: 1.5

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Core & Main

A-Score: 4.6/10

Value: 3.6

Growth: 8.4

Quality: 5.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

281.97$

Current Price

281.97$

Potential

-0.00%

Expected Cash-Flows