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Timken (TKR) to Provide Precision Drives to Redstone Facility

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The Timken Company (TKR - Free Report) has been chosen by BrightSource Energy to provide advanced precision drives for the South Africa-based Redstone Solar Thermal Power project.
    
Through solar-tracking technology, Timken will appropriately position Redstone's heliostat mirrors to reflect the sun's rays. The Redstone facility will use molten salt to store the thermal energy and convert it to electricity for South African consumers.

Redstone is likely to start commercial operations by the end of 2023 and can generate up to 100 MW of electricity, making it South Africa's largest renewable energy project so far. The zero-emissions facility does not require natural gas or oil backup. Additionally, it significantly lowers water consumption for cooling by using an efficient, low-water dry cooling system.

The deal supports Timken’s goal of enhancing environmental sustainability through product innovation, operational excellence and technology. The company has invested heavily in R&D for the solar energy market sector, building strong manufacturing, engineering and testing capabilities in the United States and China.

In the past three years, the company has been focused on building its renewable energy portfolio through innovation and acquisitions. In 2021, Timken achieved double-digit revenue growth in the renewable energy market for the fourth consecutive year. Renewable energy is Timken’s largest individual end-market sector generating 12% of sales in 2021 compared with only 5% in 2018. 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 renewable is expected to more than double by 2030.

The company witnessed record sales in wind energy last year and will continue to gain from this momentum in the years to come. In the last five years, Timken wind energy sales have grown at more than double the CAGR for the global wind energy market during the same time frame. As global demand for equipment and services for the growing wind energy market increases, the company is poised to capitalize on this trend. Timken announced that it would make capital investments of more than $75 million through early 2022 to expand its renewable energy business.

Timken expects higher demand across most end markets in the current year. It anticipates total revenues to be up around 8% in 2022 from 2021 levels. The Mobile and Process Industries segments are anticipated to be up double-digits organically. Adjusted earnings per share for the year are expected to be between $5.00 and $5.40. The mid-point of the guidance indicates year-over-year growth of 10%. Apart from strong demand, earnings growth will be supported by benefits from price realization and growth initiatives. The ongoing supply chain challenges and inflationary cost pressure will likely be offset by significant price realization and operational excellence initiatives.

Price Performance

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In the past year, shares of Timken have lost 33.2% compared with the industry’s fall of 28.9%.

Zacks Rank and Stocks to Consider

Timken currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Greif Inc. (GEF - Free Report) , Titan International (TWI - Free Report) and RBC Bearings . While GEF and TWI each flaunt a Zacks Rank #1 (Strong Buy), ROLL carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an estimated earnings growth rate of 36% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.

Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. The company’s shares have gained 3% in the past year.

Titan International has an estimated earnings growth rate of 112% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 55%.

Titan International pulled off a trailing four-quarter earnings surprise of 56.4%, on average. The company’s shares have appreciated 76.9% in a year’s time.

RBC Bearings has an expected earnings growth rate of 50% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 7% in the past 60 days.

RBC Bearings has a trailing four-quarter earnings surprise of 3.4%, on average. ROLL’s shares have increased 1.3% in the past year.


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