What's in Store for Applied Industrial (AIT) in Q1 Earnings?
Applied Industrial Technologies, Inc. AIT is scheduled to release first-quarter fiscal 2024 (ended September 2023) results on Oct 26, before market open.
The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings has been unchanged in the past 60 days. The company has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average beat being 15%.
Let's see how things are shaping up for AIT this earnings season.
Factors to Note
Rising selling, distribution and administrative expenses and increasing cost of sales due to raw material inflation are likely to dent Applied Industrial’s bottom line in the to-be-reported quarter. Also, industrial supply-chain issues and labor woes are expected to hurt the company’s fiscal first-quarter results.
AIT’s fluid power technology business has been exhibiting weakness due to ongoing inbound component delays and the third quarter is no different. Higher interest rates, tighter credit conditions and lingering uncertainty are likely to hurt the soon-to-be-reported quarter’s results.
However, robust growth across the U.S. Service Center network and indirect consumables business is likely to support the Service Center Based Distribution segment in the to-be-reported quarter. We expect the segment’s revenues to increase 1.6% from the year-ago reported number.
We expect the Engineered Solutions segment’s fiscal first quarter revenues to increase 3.2% year over year owing to 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).
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 has been driving AIT’s top line in the fiscal first quarter. We expect the company’s total revenues to increase 2.1% from the year-ago reported figure. Our estimate for the company’s earnings indicates a 4% rise from the year-ago reported number.
However, given Applied Industrial’s substantial international presence, we expect adverse foreign currency movements to dent Canada revenues by 2.7% on a year over year basis. Our estimate for revenues in Other countries indicates a 4.7% decrease from the year-ago reported number.
Applied Industrial Technologies, Inc. Price and EPS Surprise
Applied Industrial Technologies, Inc. price-eps-surprise | Applied Industrial Technologies, Inc. Quote
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AIT this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as elaborated below.
Earnings ESP: Applied Industrial has an Earnings ESP of -0.73% as the Most Accurate Estimate is pegged at $2.05, which is lower than the Zacks Consensus Estimate of $2.07. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: Applied Industrial presently sports a Zacks Rank of 1.
Highlights of Q4 Earnings
Applied Industrial reported fourth-quarter fiscal 2023 (ended Jun 30, 2023) earnings of $2.35 per share, beating the Zacks Consensus Estimate of earnings of $2.18 per share. The bottom line jumped 16.3% year over year. Net sales of $1,158.1 million also outperformed the consensus estimate of $1,117 million. The top line jumped 9.1% year over year. Organic sales increased 8.6%.
Stocks to Consider
Here are some companies within the broader Industrial Products sector, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Emerson Electric Co. EMR has an Earnings ESP of +0.12% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to release fourth-quarter fiscal 2023 (ended Sep 30, 2023) results on Oct 30. Emerson’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters while missing in one, the average beat being 7.4%.
Ingersoll Rand Inc. IR has an Earnings ESP of +1.00% and a Zacks Rank of 3 at present. The company is slated to release third-quarter 2023 results on Nov 1.
Ingersoll Rand’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 14.9%.
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Emerson Electric Co. (EMR) : Free Stock Analysis Report
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Ingersoll Rand Inc. (IR) : Free Stock Analysis Report
