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Timken (TKR) Sees Strong Growth in Solar Energy Revenues
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The Timken Company (TKR - Free Report) announced that its solar revenues have tripled in the 12 month period ended Jun 30, 2021 since its foray into the solar industry in 2018. With this performance, it has not only outpaced the market growth but also fortified its leadership position. As the world continues to transition to renewable energy sources, Timken expects its solar energy revenues to grow at a double-digit pace over the next three to five years.
Timken, which is a global leader in engineered bearings and power transmission products, has been active in the wind market for more than 10 years. In a bid to diversify its portfolio and tap the attractive solar industry, the company acquired Cone Drive in September 2018. Cone Drive is a leader in precision drives used in diverse markets including solar, automation, aerial platforms, and food and beverage. Apart from adding exposure to the solar industry, the buyout increased Timken’s power transmission presence in China as well.
Over the past three years, the company has been focused on building its renewable energy portfolio through innovation and acquisitions. Renewable energy is currently Timken’s largest individual end-market sector generating 12% of sales, compared to only 5% in 2018. In 2020, sales to renewable energy customers grew by more than 50% year over year driven by strong market growth and share gains. It is to be noted that Timken witnessed a decline of 7.3% in overall sales in 2020 due to weak demand amid the COVID-19 pandemic. However, the renewable energy market sector exhibited growth and acted as the saving grace. The momentum continues this year as well. Case in point, the renewable energy market sector, along with recovery in other end markets, drove year-over-year improvement of 21% in Timken’s sales in the first half.
By investing heavily in research and development, and building strong manufacturing, engineering and testing capabilities, Timken has emerged as a trusted partner for the world’s largest manufacturers, providing technical expertise and innovative solutions to develop individual and customized solutions for each solar installation. Its high-precision drives provide tracking and positioning capabilities for both photovoltaic and concentrated solar power applications. Earlier this year, Timken was awarded a multi-million dollar contract by China-based solar tracker OEM Arctech Solar to provide a custom engineered slewing drive system for PowerChina's Jiangxi Electric power project. It is reportedly the largest drive project of its kind in the world.
The global demand for renewable energy is expected to witness a CAGR of around 8% over the next 10 years. The share of electricity generation from renewables is expected to more than double by 2030. To capitalize on this trend, Timken plans to make renewables a bigger part of its portfolio in the future. In line with this, the company announced that it will make capital investments of more than $75 million through early 2022. This entails expansion of manufacturing capacity, broadening the product range and improving productivity for precision drives used in the solar energy market.
Although the company banks on renewables to play a key role in its growth story, it continues to explore and invest in other attractive markets that present equally compelling value-creation opportunities. In fact, Timken’s diversity in terms of end market, customer and geography, product innovation provides it with a competitive edge. The company has a balanced capital allocation framework per which it continues to pursue acquisitions and make investments in growth while returning cash to shareholders.
Share Price Performance
Image Source: Zacks Investment Research
Over the past year, shares of Timken have gained 32.9% compared with the industry’s rally of 35.3%.
Kadant has an anticipated earnings growth rate of 48.2% for fiscal 2021. The company’s shares have gained 70%, in the past year.
Valmont Industries has an estimated earnings growth rate of 32.1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 92.3%.
Columbus McKinnon has a projected earnings growth rate of 155% for 2021. The stock has appreciated 24% over the past year.
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Timken (TKR) Sees Strong Growth in Solar Energy Revenues
The Timken Company (TKR - Free Report) announced that its solar revenues have tripled in the 12 month period ended Jun 30, 2021 since its foray into the solar industry in 2018. With this performance, it has not only outpaced the market growth but also fortified its leadership position. As the world continues to transition to renewable energy sources, Timken expects its solar energy revenues to grow at a double-digit pace over the next three to five years.
Timken, which is a global leader in engineered bearings and power transmission products, has been active in the wind market for more than 10 years. In a bid to diversify its portfolio and tap the attractive solar industry, the company acquired Cone Drive in September 2018. Cone Drive is a leader in precision drives used in diverse markets including solar, automation, aerial platforms, and food and beverage. Apart from adding exposure to the solar industry, the buyout increased Timken’s power transmission presence in China as well.
Over the past three years, the company has been focused on building its renewable energy portfolio through innovation and acquisitions. Renewable energy is currently Timken’s largest individual end-market sector generating 12% of sales, compared to only 5% in 2018. In 2020, sales to renewable energy customers grew by more than 50% year over year driven by strong market growth and share gains. It is to be noted that Timken witnessed a decline of 7.3% in overall sales in 2020 due to weak demand amid the COVID-19 pandemic. However, the renewable energy market sector exhibited growth and acted as the saving grace. The momentum continues this year as well. Case in point, the renewable energy market sector, along with recovery in other end markets, drove year-over-year improvement of 21% in Timken’s sales in the first half.
By investing heavily in research and development, and building strong manufacturing, engineering and testing capabilities, Timken has emerged as a trusted partner for the world’s largest manufacturers, providing technical expertise and innovative solutions to develop individual and customized solutions for each solar installation. Its high-precision drives provide tracking and positioning capabilities for both photovoltaic and concentrated solar power applications. Earlier this year, Timken was awarded a multi-million dollar contract by China-based solar tracker OEM Arctech Solar to provide a custom engineered slewing drive system for PowerChina's Jiangxi Electric power project. It is reportedly the largest drive project of its kind in the world.
The global demand for renewable energy is expected to witness a CAGR of around 8% over the next 10 years. The share of electricity generation from renewables is expected to more than double by 2030. To capitalize on this trend, Timken plans to make renewables a bigger part of its portfolio in the future. In line with this, the company announced that it will make capital investments of more than $75 million through early 2022. This entails expansion of manufacturing capacity, broadening the product range and improving productivity for precision drives used in the solar energy market.
Although the company banks on renewables to play a key role in its growth story, it continues to explore and invest in other attractive markets that present equally compelling value-creation opportunities. In fact, Timken’s diversity in terms of end market, customer and geography, product innovation provides it with a competitive edge. The company has a balanced capital allocation framework per which it continues to pursue acquisitions and make investments in growth while returning cash to shareholders.
Share Price Performance
Image Source: Zacks Investment Research
Over the past year, shares of Timken have gained 32.9% compared with the industry’s rally of 35.3%.
Zacks Rank & Stocks to Consider
Timken currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Kadant Inc. (KAI - Free Report) , Valmont Industries, Inc. (VMI - Free Report) and Columbus McKinnon Corporation (CMCO - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kadant has an anticipated earnings growth rate of 48.2% for fiscal 2021. The company’s shares have gained 70%, in the past year.
Valmont Industries has an estimated earnings growth rate of 32.1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 92.3%.
Columbus McKinnon has a projected earnings growth rate of 155% for 2021. The stock has appreciated 24% over the past year.