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Here's Why Applied Industrial (AIT) is an Attractive Pick Now

Applied Industrial Technologies, Inc. AIT is benefiting from strength across its end markets, accretive acquisitions and shareholder-friendly moves.

Let’s delve into the factors that make this current Zacks Rank #2 (Buy) company a smart investment choice at the moment.

Growth Catalysts

Business Strength: Solid momentum across the food and beverage, lumber and wood, mining, pulp and paper, energy, utilities and refining end markets is aiding Applied Industrial. The Service Center Based Distribution segment is benefiting from growth in larger national accounts and fluid power aftermarket sales. The segment is also enjoying the benefits from sales force effectiveness initiatives as it continues to leverage technology investments to streamline sales processes. Its revenues increased 3.4% in the second quarter of fiscal 2024 (ended Dec 31, 2023). For fiscal 2024 (ending June 2024), the company predicts total sales to increase 1-3% year over year.

Expansion Initiatives: The company solidified its product portfolio and leveraged business opportunities by adding assets. The acquisitions of Bearing Distributors and Cangro (September 2023) enhanced Applied Industrial’s footprint and strategic growth initiatives across the US, Southeast and upper Northeast regions. The Advanced Motion Systems Inc. (AMS) (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.

The acquisition of Automation, Inc. (November 2022), expanded Applied Industrial’s footprint across key verticals and geographies while supplementing its value-added services and cross-selling efforts. In second-quarter fiscal 2024, buyouts had a positive impact of 1.4% on the company's sales. Acquisitions boosted sales by 1.6% and 1.0% for the Service Center-Based Distribution and Engineered Solutions segments in the fiscal second quarter, respectively.

Rewards to Shareholders: Applied Industrial continues to increase shareholders’ value through dividend payment & share repurchases. In the first six months of fiscal 2024, Applied Industrial rewarded shareholders with dividends of $27.2 million, up 3.4% year over year. The company hiked its quarterly dividend rate by 5.7% in January 2024. Also, in fiscal 2023 (ended June 2023), AIT paid out dividends worth $53.4 million, up 3.2% on a year-over-year basis. In August 2022, the company’s board of directors authorized a new share buyback program to repurchase up to 1.5 million shares of its common stock.

Northward Estimate Revision: The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has been revised 1.7% upward in the past 60 days.

Price Performance: Shares of Applied Industrial have gained 32.8% in the past year, outperforming the industry’s 23.7% increase.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Other Stocks to Consider

Some other top-ranked companies from the Industrial Products sector are discussed below:

Atmus Filtration Technologies Inc. ATMU presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 20.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ATMU’s earnings estimates have increased 2% for 2024 in the past 60 days. Shares of Atmus Filtration have risen 5.3% in the past year.

AZZ Inc. AZZ currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of 37.5%, on average.

In the past 60 days, estimates for AZZ’s earnings have increased 5.4% for fiscal 2024. The stock has soared 79.6% in the past year.

Brady Corporation BRC presently carries a Zacks Rank of 2. BRC’s earnings surprise in the last four quarters was 6.3%, on average.

In the past 60 days, estimates for Brady’s fiscal 2024 earnings have remained steady. The stock has gained 5.8% in the past year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report

AZZ Inc. (AZZ) : Free Stock Analysis Report

Brady Corporation (BRC) : Free Stock Analysis Report

Atmus Filtration Technologies Inc. (ATMU) : Free Stock Analysis Report

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Zacks Investment Research

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