Applied Industrial (AIT) Rides on Business Strength & Buyouts
Applied Industrial Technologies, Inc. AIT currently boasts strong prospects on business strength, growth investments, acquisitions and a sound capital deployment strategy.
The Zacks Rank #1 (Strong Buy) company has a market capitalization of $3.9 billion. In the past six months, it has gained 18% against the industry’s decline of 15.9%.
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Let’s delve into the factors that make investing in the company a smart choice at the moment.
Business Strength: In second-quarter fiscal 2022 (ended December 2021), Applied Industrial's organic sales improved 16.4% year over year, driven by strength across its industrial end markets. Strong demand environment in end markets like technology, food & beverage, lumber & wood, pulp & paper, metals, industrial machinery, chemicals, utilities, and mining are likely to drive the company’s performance in the quarters ahead.
Also, its focus on pricing and cross-selling actions, along with growth initiatives, is likely to be tailwinds. For fiscal 2022 (ending June 2022), it anticipates organic sales growth of 10.5-11.5% on a year-over-year basis.
Benefits from Acquisitions: The company intends to expand its market share, product offerings and customer base through acquisitions. With the acquisition of R.R. Floody (August 2021), Applied Industrial boosted its product offerings in the automation technology space. Also, its buyout of Gibson Engineering Company (January 2021) and Advanced Control Solutions (October 2020) strengthened its range of automation solution offerings across end markets.
Acquisitions contributed 2.1% and 1.6% to the company's sales in the first quarter (ended September 2021) and the second quarter of fiscal 2022, respectively.
Rewards to Shareholders: Applied Industrial remains committed to rewarding shareholders through share-repurchase programs and dividend payments. In the first six months of fiscal 2022, the company paid out dividends of $25.5 million to shareholders and repurchased shares worth $10.1 million. It hiked the quarterly dividend rate by 3% in January 2022. Exiting the fiscal second quarter, the company had 353,000 shares left to be repurchased.
Initiatives: Applied Industrial's focus on improving the product line, value-added services, operational excellence initiatives and cost-saving measures are likely to improve its competency over time. Its investments in expanding automation, IIoT and digital offerings, along with customer development initiatives, are likely to be advantageous.
Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for fiscal 2022 earnings has moved up from $5.41 to $5.92 on one upward estimate revision versus none downward. The consensus estimate for fiscal 2023 (ending June 2023) earnings has increased from $5.94 to $6.46 on one upward estimate revision against none downward.
Other Stocks to Consider
Some other top-ranked companies from the same space are discussed below.
Nordson Corporation NDSN presently carries a Zacks Rank #2 (Buy). The company delivered a four-quarter earnings surprise of 9.85%, on average.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Nordson’s earnings estimates have increased 1.1% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have lost 7.4% in the past six months.
Standex International Corporation SXI presently has a Zacks Rank #2. Its earnings surprise in the last four quarters was 5.85%, on average.
In the past 60 days, Standex’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022). SXI’s shares have gained 13.6% in the past six months.
IDEX Corporation IEX presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 1.46%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 4.2% for 2022. IEX’s shares have lost 10.6% in the past six months.
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Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
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