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Applied Industrial Technologies, Inc. (AIT - Free Report) is benefitting from its focus on pricing and cross-selling actions and growth initiatives. Its Service Center Based Distribution segment is backed by strength in end markets like food & beverage, mining, metals, pulp & paper, energy, aggregates, lumber & wood and transportation. Strength across mining, metals, agriculture, chemicals, technology, food & beverage, and machinery markets are aiding the company’s Engineered Solutions segment.
Applied Industrial has been strengthening and expanding its businesses through asset additions for a while. AIT’s acquisition of R.R. Floody (August 2021) enhanced its product offerings in the automation technology space. Also, its buyout of Gibson (January 2021) added value to its automation solution offerings. Acquisitions positively impacted its sales by 0.3% in first-quarter fiscal 2023 (ended Sep 30, 2022).
AIT’s commitment to rewarding its shareholders through dividend payouts and share-repurchase programs is praiseworthy. In the first three months of fiscal 2023, AIT paid out dividends worth $13.1 million. Also, 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.
However, escalating costs and expenses have been a major concern for AIT over time. In the fiscal first quarter, its cost of sales increased 18.7% on a year-over-year basis due to high raw material costs. Also, its selling, distribution and administrative expenses rose 10.8%. If left unchecked, high costs of raw materials might impact its margins and profitability in the near term. Labor shortages and supply-chain disruptions are other concerns for the company.
Given AIT’s extensive presence across international markets, its operations are subject to risks associated with unfavorable movement in foreign currencies and geopolitical issues. Foreign exchange headwinds had an adverse impact of 0.5% on its sales in the fiscal first quarter. In the quarters ahead, Applied Industrial’s overseas business might be depressed by a stronger U.S. dollar.
Image Source: Zacks Investment Research
In the past six months, this currently Zacks Rank #3 (Hold) stock has surged 35.1% compared with the industry’s 17.3% increase.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
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Applied Industrial (AIT) Holds Promise Despite Challenges
Applied Industrial Technologies, Inc. (AIT - Free Report) is benefitting from its focus on pricing and cross-selling actions and growth initiatives. Its Service Center Based Distribution segment is backed by strength in end markets like food & beverage, mining, metals, pulp & paper, energy, aggregates, lumber & wood and transportation. Strength across mining, metals, agriculture, chemicals, technology, food & beverage, and machinery markets are aiding the company’s Engineered Solutions segment.
Applied Industrial has been strengthening and expanding its businesses through asset additions for a while. AIT’s acquisition of R.R. Floody (August 2021) enhanced its product offerings in the automation technology space. Also, its buyout of Gibson (January 2021) added value to its automation solution offerings. Acquisitions positively impacted its sales by 0.3% in first-quarter fiscal 2023 (ended Sep 30, 2022).
AIT’s commitment to rewarding its shareholders through dividend payouts and share-repurchase programs is praiseworthy. In the first three months of fiscal 2023, AIT paid out dividends worth $13.1 million. Also, 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.
However, escalating costs and expenses have been a major concern for AIT over time. In the fiscal first quarter, its cost of sales increased 18.7% on a year-over-year basis due to high raw material costs. Also, its selling, distribution and administrative expenses rose 10.8%. If left unchecked, high costs of raw materials might impact its margins and profitability in the near term. Labor shortages and supply-chain disruptions are other concerns for the company.
Given AIT’s extensive presence across international markets, its operations are subject to risks associated with unfavorable movement in foreign currencies and geopolitical issues. Foreign exchange headwinds had an adverse impact of 0.5% on its sales in the fiscal first quarter. In the quarters ahead, Applied Industrial’s overseas business might be depressed by a stronger U.S. dollar.
Image Source: Zacks Investment Research
In the past six months, this currently Zacks Rank #3 (Hold) stock has surged 35.1% compared with the industry’s 17.3% increase.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
MRC Global Inc. (MRC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). MRC’s earnings surprise in the last four quarters was 103%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, MRC Global’s earnings estimates have increased 16.2% for 2022. The stock has rallied 19.9% in the past six months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 0.6% for 2022. The stock has rallied 27% in the past six months.
EnerSys (ENS - Free Report) delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. The stock has gained 27% in the past six months.