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Friday, October 27, 2023 9:20:31 AM
Bull of the Day: Applied Industrial Technologies (AIT)
By: Zacks Investment Research | October 27, 2023
Applied Industrial Technologies (AIT) is a leading industrial distributor that provides critical components, equipment, and value-added services to a wide range of industries, from manufacturing to utilities. With a vast network of suppliers and locations, AIT offers its customers access to a broad product portfolio, including bearings, power transmission components, fluid power components, and industrial supplies.
Applied Industrial Technology currently enjoys a Zacks Rank #1 (Strong Buy) rating, indicating upward trending earnings revisions and improving the near-term odds of a move higher in the stock. However, AIT stock has put up incredible returns over the long-term as well.
Over the last 25 years Applied Industrial Technology stock has compounded at an annual rate of 16.2%, double the average annual return on the S&P 500, and many multiples of total return.
Image Source: Zacks Investment Research
Earnings Estimates Climb
Applied Industrial Technologies’ earnings estimate have been on a steady climb higher over the last three years, along with its stock price.
Over the last two months, current quarter earnings estimates have been revised higher by 0.5% and are expected to grow 5.1% YoY to $2.07 per share. FY23 earnings estimates have been increased by 1.3% over that same period and are forecast to climb 4.3% YoY to $9.13 per share.
Image Source: Zacks Investment Research
Compelling Free Cash Flow
In the chart below we can see that AIT has an FCF yield of 5.3%, which is above the industry average of 3.5% and a relatively high percentage in general. Furthermore, AIT has shown that it has maintained a history of positive free cash flow indicating financial discipline. The company has grown its annual FCF by a CAGR of 12.5% annually.
Image Source: Zacks Investment Research
Relative Strength
In what has developed into an increasingly more challenging and choppy market, AIT is showing considerable relative strength against the broad market. While the S&P 500 and leading stocks have been trading sideways to lower since mid-summer, Applied Industrial Technologies continues to hold up well, and has outperformed the market by almost 20% over that time.
Image Source: TradingView
Valuation
Applied Industrial Technologies is trading at a one year forward earnings multiple of 16.7x, which is below the industry average and in line with its 10-year median. Additionally, the company pays a dividend yield of 0.9% and has raised the payment by an average of 3.1% annually over the last five years.
Image Source: Zacks Investment Research
Bottom Line
Applied Industrial Technologies is an incredibly durable company with a very long history of earnings growth. Since 1994 it has increased its EPS from $0.34 per share to $8.75, an incredible compound annual growth rate of 11.9%. Because it creates products that have been, and will continue to be used for many decades, the earnings growth can be expected to persist.
Thus, any investor looking for a conservative investment, that also has near term bullish catalysts should most certainly consider Applied Industrial Technologies.
Read Full Story »»»
DiscoverGold
By: Zacks Investment Research | October 27, 2023
Applied Industrial Technologies (AIT) is a leading industrial distributor that provides critical components, equipment, and value-added services to a wide range of industries, from manufacturing to utilities. With a vast network of suppliers and locations, AIT offers its customers access to a broad product portfolio, including bearings, power transmission components, fluid power components, and industrial supplies.
Applied Industrial Technology currently enjoys a Zacks Rank #1 (Strong Buy) rating, indicating upward trending earnings revisions and improving the near-term odds of a move higher in the stock. However, AIT stock has put up incredible returns over the long-term as well.
Over the last 25 years Applied Industrial Technology stock has compounded at an annual rate of 16.2%, double the average annual return on the S&P 500, and many multiples of total return.
Image Source: Zacks Investment Research
Earnings Estimates Climb
Applied Industrial Technologies’ earnings estimate have been on a steady climb higher over the last three years, along with its stock price.
Over the last two months, current quarter earnings estimates have been revised higher by 0.5% and are expected to grow 5.1% YoY to $2.07 per share. FY23 earnings estimates have been increased by 1.3% over that same period and are forecast to climb 4.3% YoY to $9.13 per share.
Image Source: Zacks Investment Research
Compelling Free Cash Flow
In the chart below we can see that AIT has an FCF yield of 5.3%, which is above the industry average of 3.5% and a relatively high percentage in general. Furthermore, AIT has shown that it has maintained a history of positive free cash flow indicating financial discipline. The company has grown its annual FCF by a CAGR of 12.5% annually.
Image Source: Zacks Investment Research
Relative Strength
In what has developed into an increasingly more challenging and choppy market, AIT is showing considerable relative strength against the broad market. While the S&P 500 and leading stocks have been trading sideways to lower since mid-summer, Applied Industrial Technologies continues to hold up well, and has outperformed the market by almost 20% over that time.
Image Source: TradingView
Valuation
Applied Industrial Technologies is trading at a one year forward earnings multiple of 16.7x, which is below the industry average and in line with its 10-year median. Additionally, the company pays a dividend yield of 0.9% and has raised the payment by an average of 3.1% annually over the last five years.
Image Source: Zacks Investment Research
Bottom Line
Applied Industrial Technologies is an incredibly durable company with a very long history of earnings growth. Since 1994 it has increased its EPS from $0.34 per share to $8.75, an incredible compound annual growth rate of 11.9%. Because it creates products that have been, and will continue to be used for many decades, the earnings growth can be expected to persist.
Thus, any investor looking for a conservative investment, that also has near term bullish catalysts should most certainly consider Applied Industrial Technologies.
Read Full Story »»»
DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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