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Is Applied Industrial Technologies (AIT) a Great Value Stock Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Applied Industrial Technologies (AIT) is a stock many investors are watching right now. AIT is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 18.25 right now. For comparison, its industry sports an average P/E of 21.66. Over the last 12 months, AIT's Forward P/E has been as high as 18.36 and as low as 7.04, with a median of 12.98.

AIT is also sporting a PEG ratio of 0.92. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AIT's industry has an average PEG of 2.04 right now. Over the last 12 months, AIT's PEG has been as high as 0.93 and as low as 0.92, with a median of 0.93.

Investors should also recognize that AIT has a P/B ratio of 2.80. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.61. Within the past 52 weeks, AIT's P/B has been as high as 2.83 and as low as 1.29, with a median of 2.49.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AIT has a P/S ratio of 0.67. This compares to its industry's average P/S of 1.15.

Finally, investors should note that AIT has a P/CF ratio of 10.06. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. AIT's current P/CF looks attractive when compared to its industry's average P/CF of 16.84. AIT's P/CF has been as high as 12.02 and as low as 5.47, with a median of 9.44, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Applied Industrial Technologies is likely undervalued currently. And when considering the strength of its earnings outlook, AIT sticks out at as one of the market's strongest value stocks.


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