A month has gone by since the last earnings report for Applied Industrial Technologies, Inc. (AIT - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Applied Industrial Q3 Earnings & Sales Beat, Up Y/Y
Applied Industrial Technologies reported better-than-expected results for third-quarter fiscal 2017 (ended Mar 31, 2017).
Quarterly adjusted earnings came in at $0.75 per share, handily beating the Zacks Consensus Estimate of $0.62. The company had reported a loss of $1.14 per share in the year-ago quarter.
Revenues: Net sales during the quarter came in at $679.3 million, up 7.3% year over year. Organic revenue growth during the quarter was 6.8% year over year.
The top line also comfortably surpassed the Zacks Consensus Estimate of $636 million.
The company noted that sturdy revenue performance during the quarter was driven by acquisition benefits and favorable foreign currency translation impact.
Cost & Margins: Cost of sales in the reported quarter was $488.5 million, up 6.6% year over year. Selling, general and administrative expenses (including depreciation) were $145.3 million compared to $143 million recorded in the year-ago period.
Operating income in the fiscal third quarter was $45.5 million as against the operating loss of $33 million recorded in the prior-year quarter.
Gross margin during the quarter was 28.1%, up 50 basis points year over year.
Segmental Performance: Net sales of The Service Center Based Distribution segment came in at roughly $554.9 million in the fiscal third quarter, up 5.9% year over year.
Revenues of The Fluid Power Businesses segment totaled $124.4 million, up 14% year over year.
Balance Sheet and Cash Flow: Exiting the fiscal third quarter, Applied Industrial Technologies had cash and cash equivalents of $67.3 million compared with $59.9 million recorded at the end of fiscal 2016. The company’s long-term debt was $317.4 million, down 2.2% from fiscal 2016 end.
In the first nine months of fiscal 2017, the company generated net cash of $78.5 million from its operating activities compared to $91.3 million cash generated in the year-earlier period.
In the first nine months of fiscal 2017, Applied Industrial Technologies purchased property worth $11.8 million compared with $9.4 million property purchased at the end third-quarter fiscal 2016.
Cash used for dividend payment totaled $33.2 million, while roughly $2.8 million was used for repurchasing 45,000 shares in open market.
Applied Industrial Technologies’ board of directors approved a quarterly cash dividend of 29 cents per share. The dividend would be paid on May 31 to shareholders of record as on May 15.
Outlook: Applied Industrial Technologies anticipates earnings within the range of $0.68–$0.78 per share for fourth-quarter fiscal 2017. The company projects year-over-year revenue growth in the range of 6–8% in the next quarter.
Based on the current optimistic market trends, the company raised its fiscal 2017 earnings guidance to the $2.74–$2.84 per share range, as against the prior projection of $2.50–$2.60 per share.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Applied Industrial Technologies, Inc. Price and Consensus
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock sports a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
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A month has gone by since the last earnings report for Applied Industrial Technologies, Inc. (AIT - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Applied Industrial Q3 Earnings & Sales Beat, Up Y/Y
Applied Industrial Technologies reported better-than-expected results for third-quarter fiscal 2017 (ended Mar 31, 2017).
Quarterly adjusted earnings came in at $0.75 per share, handily beating the Zacks Consensus Estimate of $0.62. The company had reported a loss of $1.14 per share in the year-ago quarter.
Revenues: Net sales during the quarter came in at $679.3 million, up 7.3% year over year. Organic revenue growth during the quarter was 6.8% year over year.
The top line also comfortably surpassed the Zacks Consensus Estimate of $636 million.
The company noted that sturdy revenue performance during the quarter was driven by acquisition benefits and favorable foreign currency translation impact.
Cost & Margins: Cost of sales in the reported quarter was $488.5 million, up 6.6% year over year. Selling, general and administrative expenses (including depreciation) were $145.3 million compared to $143 million recorded in the year-ago period.
Operating income in the fiscal third quarter was $45.5 million as against the operating loss of $33 million recorded in the prior-year quarter.
Gross margin during the quarter was 28.1%, up 50 basis points year over year.
Segmental Performance: Net sales of The Service Center Based Distribution segment came in at roughly $554.9 million in the fiscal third quarter, up 5.9% year over year.
Revenues of The Fluid Power Businesses segment totaled $124.4 million, up 14% year over year.
Balance Sheet and Cash Flow: Exiting the fiscal third quarter, Applied Industrial Technologies had cash and cash equivalents of $67.3 million compared with $59.9 million recorded at the end of fiscal 2016. The company’s long-term debt was $317.4 million, down 2.2% from fiscal 2016 end.
In the first nine months of fiscal 2017, the company generated net cash of $78.5 million from its operating activities compared to $91.3 million cash generated in the year-earlier period.
In the first nine months of fiscal 2017, Applied Industrial Technologies purchased property worth $11.8 million compared with $9.4 million property purchased at the end third-quarter fiscal 2016.
Cash used for dividend payment totaled $33.2 million, while roughly $2.8 million was used for repurchasing 45,000 shares in open market.
Applied Industrial Technologies’ board of directors approved a quarterly cash dividend of 29 cents per share. The dividend would be paid on May 31 to shareholders of record as on May 15.
Outlook: Applied Industrial Technologies anticipates earnings within the range of $0.68–$0.78 per share for fourth-quarter fiscal 2017. The company projects year-over-year revenue growth in the range of 6–8% in the next quarter.
Based on the current optimistic market trends, the company raised its fiscal 2017 earnings guidance to the $2.74–$2.84 per share range, as against the prior projection of $2.50–$2.60 per share.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Applied Industrial Technologies, Inc. Price and Consensus
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock sports a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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