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Are Investors Undervaluing Applied Industrial Technologies (AIT) Right Now?

Zacks Equity Research
·3 mins read

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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Applied Industrial Technologies (AIT) is a stock many investors are watching right now. AIT is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 17.43. This compares to its industry's average Forward P/E of 21.56. AIT's Forward P/E has been as high as 20.82 and as low as 7.04, with a median of 14.03, all within the past year.

We also note that AIT holds a PEG ratio of 0.92. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AIT's industry currently sports an average PEG of 2.03.

Another notable valuation metric for AIT is its P/B ratio of 2.86. The P/B is a method of comparing a stock's market value to 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. AIT's P/B has been as high as 3.18 and as low as 1.29, with a median of 2.55, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AIT has a P/S ratio of 0.69. This compares to its industry's average P/S of 1.11.

Finally, we should also recognize that AIT has a P/CF ratio of 10.31. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. AIT's P/CF compares to its industry's average P/CF of 16.84. Over the past year, AIT's P/CF has been as high as 12.02 and as low as 5.47, with a median of 9.71.

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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Zacks Investment Research