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Applied Industrial Technologies, Inc. (AIT) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Applied Industrial Technologies (AIT - Free Report) ? Shares have been on the move with the stock up 8.6% over the past month. The stock hit a new 52-week high of $150.07 in the previous session. Applied Industrial Technologies has gained 16.2% since the start of the year compared to the 10.8% move for the Zacks Industrial Products sector and the 14.8% return for the Zacks Manufacturing - General Industrial industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 27, 2023, Applied Industrial Technologies reported EPS of $2.38 versus consensus estimate of $2.12 while it beat the consensus revenue estimate by 2.61%.

For the current fiscal year, Applied Industrial Technologies is expected to post earnings of $8.86 per share on $4.37 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $8.52 per share on $4.46 billion in revenues. This represents a year-over-year change of 3.32% and 1.94%, respectively.

Valuation Metrics

Applied Industrial Technologies may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Applied Industrial Technologies has a Value Score of B. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 16.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 20.3X. On a trailing cash flow basis, the stock currently trades at 17.9X versus its peer group's average of 12.3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Applied Industrial Technologies currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Applied Industrial Technologies meets the list of requirements. Thus, it seems as though Applied Industrial Technologies shares could have potential in the weeks and months to come.

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