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Why Is Timken (TKR) Down 8.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Timken (TKR - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Timken due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
Timken Beats Q2 Earnings Estimates on Higher Volumes, Raises View
Timken reported second-quarter 2026 adjusted earnings of $1.83 per share, up 28.9% year over year. The figure beat the Zacks Consensus Estimate of $1.63 by 12.3%.
Including one-time items, Timken reported earnings of 41 cents per share compared with $1.12 a year earlier. The decline reflected, among other items, impairment, restructuring and reorganization charges tied to the belts business.
Sales increased 7.5% year over year to $1.26 billion and surpassed the Zacks Consensus Estimate of $1.23 billion by 2.6%. Higher volumes across both segments, pricing, the Bijur Delimon acquisition and favorable currency translation aided growth. Organic sales increased 4.4%.
Adjusted EBITDA increased to $247.2 million from $208.2 million in the prior-year quarter. The adjusted EBITDA margin expanded 190 basis points to 19.6%. The current-quarter figure included an $8 million net benefit from IEEPA tariff refunds.
Timken's Segment Performance in Q2
Engineered Bearings segment revenues increased 3.8% year over year to $807 million. The improvement was primarily driven by higher volumes, increased pricing and favorable foreign currency translation.
The segment's adjusted EBITDA rose to $161.3 million from $153.4 million. Adjusted EBITDA margin improved to 20% from 19.7%. Positive price/mix, higher volumes, tariff refunds and favorable currency effects more than offset increased operating costs.
Industrial Motion revenues jumped 14.6% year over year to $453.9 million. The increase reflected stronger demand across most platforms and end markets, contributions from the Bijur Delimon acquisition, pricing gains and favorable foreign currency translation.
Adjusted EBITDA for the segment surged to $105.6 million from $72.6 million in the year-ago quarter. The margin expanded to 23.3% from 18.3%, aided by higher volumes, positive price/mix, tariff refunds and acquisition contributions. These benefits were partly offset by higher operating costs.
Timken's Cash Flow and Leverage Stay Balanced
Net cash provided by operating activities was $107.1 million compared with $111.3 million in the prior-year period. Free cash flow improved 2.9% to $80.5 million as capital expenditures declined to $26.6 million from $33.1 million.
Timken ended June with cash and cash equivalents of $399.1 million compared with $364.4 million at the end of 2025. Net debt increased to $1.68 billion from $1.56 billion, while the net debt-to-adjusted EBITDA ratio remained at 2.0.
During the quarter, the company returned $45 million to shareholders through dividends and share repurchases. It also raised its quarterly dividend by 3% and repurchased approximately 155,000 shares.
Timken Raises 2026 Earnings and Revenue Outlook
Timken raised its full-year 2026 adjusted earnings guidance to $6.05-$6.35 per share. Management cited first-half performance, continued momentum and disciplined execution in raising the outlook.
The company now expects 2026 revenues to increase approximately 5.5% at the midpoint from 2025. This compares with its prior expectation for 5% growth at the midpoint. The higher sales outlook reflects continued progress under Timken's Elevate to Outperform strategy and improving customer demand.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Timken has a average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Timken has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Timken (TKR) Down 8.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Timken (TKR - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Timken due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
Timken Beats Q2 Earnings Estimates on Higher Volumes, Raises View
Timken reported second-quarter 2026 adjusted earnings of $1.83 per share, up 28.9% year over year. The figure beat the Zacks Consensus Estimate of $1.63 by 12.3%.
Including one-time items, Timken reported earnings of 41 cents per share compared with $1.12 a year earlier. The decline reflected, among other items, impairment, restructuring and reorganization charges tied to the belts business.
Sales increased 7.5% year over year to $1.26 billion and surpassed the Zacks Consensus Estimate of $1.23 billion by 2.6%. Higher volumes across both segments, pricing, the Bijur Delimon acquisition and favorable currency translation aided growth. Organic sales increased 4.4%.
Adjusted EBITDA increased to $247.2 million from $208.2 million in the prior-year quarter. The adjusted EBITDA margin expanded 190 basis points to 19.6%. The current-quarter figure included an $8 million net benefit from IEEPA tariff refunds.
Timken's Segment Performance in Q2
Engineered Bearings segment revenues increased 3.8% year over year to $807 million. The improvement was primarily driven by higher volumes, increased pricing and favorable foreign currency translation.
The segment's adjusted EBITDA rose to $161.3 million from $153.4 million. Adjusted EBITDA margin improved to 20% from 19.7%. Positive price/mix, higher volumes, tariff refunds and favorable currency effects more than offset increased operating costs.
Industrial Motion revenues jumped 14.6% year over year to $453.9 million. The increase reflected stronger demand across most platforms and end markets, contributions from the Bijur Delimon acquisition, pricing gains and favorable foreign currency translation.
Adjusted EBITDA for the segment surged to $105.6 million from $72.6 million in the year-ago quarter. The margin expanded to 23.3% from 18.3%, aided by higher volumes, positive price/mix, tariff refunds and acquisition contributions. These benefits were partly offset by higher operating costs.
Timken's Cash Flow and Leverage Stay Balanced
Net cash provided by operating activities was $107.1 million compared with $111.3 million in the prior-year period. Free cash flow improved 2.9% to $80.5 million as capital expenditures declined to $26.6 million from $33.1 million.
Timken ended June with cash and cash equivalents of $399.1 million compared with $364.4 million at the end of 2025. Net debt increased to $1.68 billion from $1.56 billion, while the net debt-to-adjusted EBITDA ratio remained at 2.0.
During the quarter, the company returned $45 million to shareholders through dividends and share repurchases. It also raised its quarterly dividend by 3% and repurchased approximately 155,000 shares.
Timken Raises 2026 Earnings and Revenue Outlook
Timken raised its full-year 2026 adjusted earnings guidance to $6.05-$6.35 per share. Management cited first-half performance, continued momentum and disciplined execution in raising the outlook.
The company now expects 2026 revenues to increase approximately 5.5% at the midpoint from 2025. This compares with its prior expectation for 5% growth at the midpoint. The higher sales outlook reflects continued progress under Timken's Elevate to Outperform strategy and improving customer demand.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Timken has a average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Timken has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.