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Applied Industrial Q3 Earnings & Sales Top Estimates, Up Y/Y
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Key Takeaways
Applied Industrial Q3 EPS beat estimates, rising 3.1%, with sales up 7.3% year over year.
AIT saw strong growth in Engineered Solutions, driven by fluid power and automation demand.
Company raised FY2026 sales and earnings outlook, signaling continued momentum.
Applied Industrial Technologies, Inc. (AIT - Free Report) reported third-quarter fiscal 2026 (ended March 31, 2026) earnings of $2.65 per share, which surpassed the Zacks Consensus Estimate of $2.63. The bottom line increased 3.1% year over year.
Net sales of $1.25 billion beat the consensus estimate of $1.22 billion. Also, the top line increased 7.3% year over year. Acquisitions boosted the top line by 0.5% while foreign-currency translation had a favorable impact of 0.8%. Organic sales increased 6% year over year.
Segmental Discussion
The Service Center-Based Distribution segment’s sales, which contributed 64.3% to net sales, totaled $804.9 million. On a year-over-year basis, the segment’s sales increased 5.7%.
While organic sales increased 4.2%, foreign currency translation positively impacted sales by 1.3%. Segmental sales were aided by ongoing internal initiatives and higher technical MRO activities.
The Engineered Solutions segment’s sales (formerly the Fluid Power & Flow Control segment), which contributed 35.7% to net sales, totaled $446.5 million. On a year-over-year basis, the segment’s sales increased 10.2%.
Acquisitions boosted the top line by 0.9%. Organic sales increased 9.3% owing to strong volume across fluid power and automation businesses, and healthy growth across the flow control unit.
Applied Industrial Technologies, Inc. Price, Consensus and EPS Surprise
In the quarter, Applied Industrial’s cost of sales was up 7.3% year over year to $870.6 million. Gross profit was $380.8 million, up 7.2% from the year-ago quarter.
The gross margin inched down to 30.4% from 30.5% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) increased 7.5% year over year to $242.9 million. EBITDA was $153.9 million, reflecting an increase of 6.2%.
AIT’s Balance Sheet & Cash Flow
Exiting third-quarter fiscal 2026, Applied Industrial had cash and cash equivalents of $171.6 million compared with $388.4 million at the end of fiscal 2025. Long-term debt was $347.3 million compared with $572.3 million at the end of the prior fiscal year.
In the first nine months, it generated net cash of $319.1 million from operating activities, indicating a decrease of 7.5% from the year-ago quarter. Capital expenditures totaled $18.3 million, roughly stable year over year. Free cash flow decreased 8% year over year to $300.8 million.
In the first nine months, AIT rewarded its shareholders with dividends of $53.7 million, up 16.2% year over year.
Dividend Update
Applied Industrial’s board approved a quarterly cash dividend of 51 cents per share, payable to shareholders on May 29, 2026, of record as of May 15, 2026.
Applied Industrial’s Guidance
For fiscal 2026 (ending June 2026), Applied Industrial anticipates adjusted earnings to be in the range of $10.64-$10.75 per share compared with $10.45-$10.75 predicted earlier.
The company currently anticipates sales to increase in the range of 7.2-7.7%, higher than 5.5-7.0% predicted earlier. Organic sales are expected to increase 3.8-4.2% year over year compared with 2.5-4.0% estimated previously. AIT expects the EBITDA margin to be in the range of 12.3-12.4%.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks are discussed below:
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased by 17.2%.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 0.5%.
RBC Bearings (RBC - Free Report) presently carries a Zacks Rank of 2. RBC Bearings’ earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.3%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2026 earnings has inched down 0.3%.
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Applied Industrial Q3 Earnings & Sales Top Estimates, Up Y/Y
Key Takeaways
Applied Industrial Technologies, Inc. (AIT - Free Report) reported third-quarter fiscal 2026 (ended March 31, 2026) earnings of $2.65 per share, which surpassed the Zacks Consensus Estimate of $2.63. The bottom line increased 3.1% year over year.
Net sales of $1.25 billion beat the consensus estimate of $1.22 billion. Also, the top line increased 7.3% year over year. Acquisitions boosted the top line by 0.5% while foreign-currency translation had a favorable impact of 0.8%. Organic sales increased 6% year over year.
Segmental Discussion
The Service Center-Based Distribution segment’s sales, which contributed 64.3% to net sales, totaled $804.9 million. On a year-over-year basis, the segment’s sales increased 5.7%.
While organic sales increased 4.2%, foreign currency translation positively impacted sales by 1.3%. Segmental sales were aided by ongoing internal initiatives and higher technical MRO activities.
The Engineered Solutions segment’s sales (formerly the Fluid Power & Flow Control segment), which contributed 35.7% to net sales, totaled $446.5 million. On a year-over-year basis, the segment’s sales increased 10.2%.
Acquisitions boosted the top line by 0.9%. Organic sales increased 9.3% owing to strong volume across fluid power and automation businesses, and healthy growth across the flow control unit.
Applied Industrial Technologies, Inc. Price, Consensus and EPS Surprise
Applied Industrial Technologies, Inc. price-consensus-eps-surprise-chart | Applied Industrial Technologies, Inc. Quote
AIT’s Margin Profile
In the quarter, Applied Industrial’s cost of sales was up 7.3% year over year to $870.6 million. Gross profit was $380.8 million, up 7.2% from the year-ago quarter.
The gross margin inched down to 30.4% from 30.5% in the year-ago quarter. Selling, distribution and administrative expenses (including depreciation) increased 7.5% year over year to $242.9 million. EBITDA was $153.9 million, reflecting an increase of 6.2%.
AIT’s Balance Sheet & Cash Flow
Exiting third-quarter fiscal 2026, Applied Industrial had cash and cash equivalents of $171.6 million compared with $388.4 million at the end of fiscal 2025. Long-term debt was $347.3 million compared with $572.3 million at the end of the prior fiscal year.
In the first nine months, it generated net cash of $319.1 million from operating activities, indicating a decrease of 7.5% from the year-ago quarter. Capital expenditures totaled $18.3 million, roughly stable year over year. Free cash flow decreased 8% year over year to $300.8 million.
In the first nine months, AIT rewarded its shareholders with dividends of $53.7 million, up 16.2% year over year.
Dividend Update
Applied Industrial’s board approved a quarterly cash dividend of 51 cents per share, payable to shareholders on May 29, 2026, of record as of May 15, 2026.
Applied Industrial’s Guidance
For fiscal 2026 (ending June 2026), Applied Industrial anticipates adjusted earnings to be in the range of $10.64-$10.75 per share compared with $10.45-$10.75 predicted earlier.
The company currently anticipates sales to increase in the range of 7.2-7.7%, higher than 5.5-7.0% predicted earlier. Organic sales are expected to increase 3.8-4.2% year over year compared with 2.5-4.0% estimated previously. AIT expects the EBITDA margin to be in the range of 12.3-12.4%.
Zacks Rank and Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks are discussed below:
DXP Enterprises (DXPE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises’ earnings surpassed the consensus estimate by 52.8% in the last reported quarter. In the past 60 days, the Zacks Consensus Estimate for DXPE’s 2026 earnings has increased by 17.2%.
Nordson Corporation (NDSN - Free Report) currently carries a Zacks Rank #2 (Buy). Nordson’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 2.5%. In the past 60 days, the Zacks Consensus Estimate for Nordson’s fiscal 2026 earnings has increased 0.5%.
RBC Bearings (RBC - Free Report) presently carries a Zacks Rank of 2. RBC Bearings’ earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.3%. In the past 60 days, the Zacks Consensus Estimate for RBC Bearings’ fiscal 2026 earnings has inched down 0.3%.