Applied Industrial (AIT) Holds Promise Despite Challenges
Applied Industrial Technologies, Inc. AIT is reaping the benefits of its focus on pricing, cross selling actions and growth initiatives. Its Service Center Based Distribution segment is backed by strength in end markets like food & beverage, mining, metals, pulp & paper, energy, aggregates, lumber & wood and transportation. Strength across mining, metals, agriculture, chemicals, technology, food & beverage, and machinery markets are aiding the company’s Engineered Solutions segment.
Applied Industrial has been adding assets to its businesses for a while, strengthening and expanding them. AIT’s acquisition of R.R. Floody was acquired by AIT in August 2021. This acquisition enriched its product offerings within the automation technology sector. The company also added value with its purchase of Gibson (January 2021). The company’s first-quarter fiscal 2023 ended Sep 30, 2022, and its sales were up 0.3%.
AIT’s commitment to rewarding its shareholders through dividend payouts and share-repurchase programs is praiseworthy. AIT distributed $13.1 million in dividends during the first three months fiscal 2023. Also, in August 2022, the company’s board of directors authorized a new share buyback program to repurchase up to 1.5 million shares of its common stock.
AIT has been concerned about rising costs and expenses over the years. The high cost of raw materials caused AIT’s sales to rise 18.7% year-over-year in the fiscal quarter. The company’s administrative, selling, distribution, as well as marketing expenses increased by 10.8%. If unchecked, the high cost of raw materials could impact profitability and margins in the short term. The company also has to worry about supply-chain disruptions and labor shortages.
Given AIT’s extensive presence across international markets, its operations are subject to risks associated with unfavorable movement in foreign currencies and geopolitical issues. In the fiscal first quarter, foreign exchange headwinds had a negative impact of 0.5% on sales. In the quarters ahead, Applied Industrial’s overseas business might be depressed by a stronger U.S. dollar.
Image Source: Zacks Investment Research
In the past six months, this currently Zacks Rank #3 (Hold) stock has surged 35.1% compared with the industry’s 17.3% increase.
Stocks to Take into Account
Below are some of the better-ranked companies in the Industrial Products sector.
MRC Global Inc. MRC currently holds a Zacks Rank #1, which means it is a strong buy. MRC’s earnings surprise in the last four quarters was 103%, on average. See the full article. the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, MRC Global’s earnings estimates have increased 16.2% for 2022. In the last six months, the stock has risen 19.9%.
IDEX Corporation Currently, IEX has a Zacks Rank 2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 0.6% for 2022. Stock has gained 27% over the past six month.
EnerSys ENS had an average surprise in earnings of 2.1% for its fourth quarter. Currently, ENS carries a Zacks Rank 2
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. Stock has gained 27% over the past six month.
Want the latest Zacks Investment Research recommendations? Download 7 Best Stocks in the Next 30 Days Today Click to get this free report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
MRC Global Inc. (MRC) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report