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Here's Why You Should Hold Applied Industrial (AIT) Stock

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Applied Industrial Technologies, Inc. (AIT - Free Report) is benefitting from improving the product line, value-added services, initiatives to drive operational excellence and cost-saving efforts despite raw materials inflation, industrial supply-chain issues and labor headwinds.

Its Service Center Based Distribution segment is backed by break-fix MRO activity, sales process initiatives, ongoing pricing actions, secular growth and robust supply-chain investments across the U.S. manufacturing sector. Technical and engineering capabilities, backlog, automation demand, and diverse end-market mix, supporting favorable growth backdrop, are aiding the company’s Engineered Solutions segment.

Applied Industrial has been strengthening and expanding its businesses through asset additions for a while. The Automation, Inc. buyout (November 2022) expands Applied Industrial’s footprint across key verticals and geographies, while supplementing its value-added services and cross-selling efforts. AIT’s acquisition of R.R. Floody (August 2021) enhanced its product offerings in the automation technology space. Also, its buyout of Gibson (January 2021) added value to its automation solution offerings. Acquisitions positively impacted its sales by 0.5% in second-quarter fiscal 2023 (ended Dec 31, 2022).

AIT’s healthy cash position enables it to reward its shareholders handsomely. In the first six months of fiscal 2023, AIT paid out dividends worth $26.26 million. The company hiked the quarterly dividend rate by 2.9% in January 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.

In light of the above-mentioned positives, we believe, investors should retain Applied Industrial’s stock for now, as suggested by its current Zacks Rank #3 (Hold). In the past six months, the stock has rallied 23.6% compared with the industry’s 10.3% growth.


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Stocks to Consider

Some better-ranked companies from the Industrial Products sector are discussed below:

Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank of #2 (Buy). IR’s earnings surprise in the last four quarters was 8.5%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.

In the past 60 days, Ingersoll Rand’s earnings estimates have increased 3.4% for 2023. The stock has gained 16.5% in the past six months.

A. O. Smith Corporation (AOS - Free Report) presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 3.2%, on average.

AOS’ earnings estimates have increased 4.1% for 2023 in the past 60 days. Shares of A. O. Smith have risen 8% in the past six months.

Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 11.6%, on average.

In the past 60 days, Valmont’s earnings estimates have increased 0.3% for 2023. The stock has rallied 4.2% in the past six months.

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