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Here's Why It Is Worth Investing in Applied Industrial (AIT)
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Applied Industrial Technologies, Inc. (AIT - Free Report) is benefiting from strength in its Service Center Based Distribution segment and solid momentum in the end markets. Focus on pricing and cross-selling actions, and growth initiatives augur well for the company.
Let’s delve into the factors, which make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
Segmental Strength: Robust growth across the U.S. Service Center network and indirect consumables business, focused on vendor-managed inventory and vending solutions, are aiding the Service Center Based Distribution segment. Strong performance and backlog conversion in industrial and off-highway mobile fluid power solutions markets, as well as sustained customer Maintenance, Repair, and Operations (MRO), are aiding the Engineered Solutions segment.
Expansion Efforts: AIT has been strengthening its business through acquisitions. The Advanced Motion Systems Inc. (AMS) (April 2023) buyout expanded the company’s footprint in the upper Northeast region of the United States while helping to bolster relationships with leading suppliers. The acquisition of Automation, Inc. (November 2022) expanded Applied Industrial’s footprint across key verticals and geographies while supplementing its value-added services and cross-selling efforts. In fourth-quarter fiscal 2023 (ended Jun 30, 2023), buyouts had a positive impact of 0.7% on the company's sales. For the Engineered Solutions segment, acquired assets boosted sales 2.2% year over year in the fiscal fourth quarter.
End Market Strength: Solid momentum in the end markets, including chemicals, food and beverage, utilities, energy, and pulp and paper end markets, driven by MRO activity and capital spending on process infrastructure, is aiding the company. The company’s investments to expand automation, industrial Internet of Things, digital offerings and customer development initiatives are expected to drive its growth.
Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payments. In fiscal 2023, it paid out dividends worth $53.4 million, up 3.2% on a year-over-year basis. The company hiked its quarterly dividend rate by 2.9% in January 2023.
Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has been revised 1.1% upward.
Price Performance: Shares of AIT rose 57.3% in a year, outperforming the industry‘s 22.6% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 10.4% for 2023. The stock has gained 65.9% in the past year.
Ingersoll Rand Inc. (IR - Free Report) presently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 14.9%, on average.
In the past 60 days, estimates for Ingersoll Rand’s earnings have increased 3% for 2023. The stock has gained 46.3% in the past year.
Eaton Corporation plc (ETN - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
In the past 60 days, estimates for Eaton’s earnings have increased 3.9% for 2023. The stock has soared 60.8% in the past year.
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Here's Why It Is Worth Investing in Applied Industrial (AIT)
Applied Industrial Technologies, Inc. (AIT - Free Report) is benefiting from strength in its Service Center Based Distribution segment and solid momentum in the end markets. Focus on pricing and cross-selling actions, and growth initiatives augur well for the company.
Let’s delve into the factors, which make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.
Segmental Strength: Robust growth across the U.S. Service Center network and indirect consumables business, focused on vendor-managed inventory and vending solutions, are aiding the Service Center Based Distribution segment. Strong performance and backlog conversion in industrial and off-highway mobile fluid power solutions markets, as well as sustained customer Maintenance, Repair, and Operations (MRO), are aiding the Engineered Solutions segment.
Expansion Efforts: AIT has been strengthening its business through acquisitions. The Advanced Motion Systems Inc. (AMS) (April 2023) buyout expanded the company’s footprint in the upper Northeast region of the United States while helping to bolster relationships with leading suppliers. The acquisition of Automation, Inc. (November 2022) expanded Applied Industrial’s footprint across key verticals and geographies while supplementing its value-added services and cross-selling efforts. In fourth-quarter fiscal 2023 (ended Jun 30, 2023), buyouts had a positive impact of 0.7% on the company's sales. For the Engineered Solutions segment, acquired assets boosted sales 2.2% year over year in the fiscal fourth quarter.
End Market Strength: Solid momentum in the end markets, including chemicals, food and beverage, utilities, energy, and pulp and paper end markets, driven by MRO activity and capital spending on process infrastructure, is aiding the company. The company’s investments to expand automation, industrial Internet of Things, digital offerings and customer development initiatives are expected to drive its growth.
Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payments. In fiscal 2023, it paid out dividends worth $53.4 million, up 3.2% on a year-over-year basis. The company hiked its quarterly dividend rate by 2.9% in January 2023.
Northbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has been revised 1.1% upward.
Price Performance: Shares of AIT rose 57.3% in a year, outperforming the industry‘s 22.6% increase.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked companies from the Industrial Products sector are discussed below:
Caterpillar Inc. (CAT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 10.4% for 2023. The stock has gained 65.9% in the past year.
Ingersoll Rand Inc. (IR - Free Report) presently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 14.9%, on average.
In the past 60 days, estimates for Ingersoll Rand’s earnings have increased 3% for 2023. The stock has gained 46.3% in the past year.
Eaton Corporation plc (ETN - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
In the past 60 days, estimates for Eaton’s earnings have increased 3.9% for 2023. The stock has soared 60.8% in the past year.