Applied Industrial (AIT) Up 22.7% YTD: Will the Trend Last?
Shares of Applied Industrial Technologies, Inc. AIT have rallied 22.7% in the year-to-date period, outperforming the industry’s 14.4% increase. The upside can be linked to solid momentum in the end markets and acquisition benefits. Shareholder-friendly policies further drove the stock.
What’s Aiding AIT?
The company is benefiting from strength across its Service Center Based Distribution and Engineered Solutions (formerly Fluid Power & Flow Control segment) segments. Robust growth across the U.S. Service Center network and indirect consumables business focused on vendor-managed inventory and vending solutions is driving the revenues of 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. 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 supporting the company’s growth.
AIT’s measures to expand operations through asset additions support its top-line growth. The Advanced Motion Systems Inc. (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. In fourth-quarter fiscal 2023 (ended June 2023), buyouts had a positive impact of 0.7% on the company's sales. For the Engineered Solutions segment, acquired assets boosted sales by 2.2% year over year in the fiscal fourth quarter.
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The company’s commitment to handsomely reward its shareholders through dividends and share buybacks is encouraging. The company hiked its quarterly dividend rate by 2.9% in January 2023. In fiscal 2023, it paid out dividends worth $53.4 million, up 3.2% on a year-over-year basis.
Will the Uptrend in Shares Last?
Improving supply chains and strength across end markets are expected to drive AIT’s performance in the quarters ahead. Investments to expand automation, industrial Internet of Things, digital offerings and customer development initiatives are likely to be advantageous for the company.
Zacks Rank & Other Stocks to Consider
Applied Industrial currently carries Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Caterpillar Inc. CAT presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
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 13.9% for 2023. The stock has gained 17.9% in the year-to-date period.
A. O. Smith Corp. AOS presently carries a Zacks Rank of 2. AOS’ earnings surprise in the last four quarters was 10.5%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 2.9% for 2023. The stock has gained 26.3% in the year-to-date period.
Alamo Group Inc. ALG presently carries a Zacks Rank of 2. ALG’s earnings surprise in the last four quarters was 13%, on average.
In the past 60 days, estimates for Alamo’s 2023 earnings have increased 1.1%. The stock has gained 22.1% in the year-to-date period.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Alamo Group, Inc. (ALG) : Free Stock Analysis Report
