We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Timken (TKR) Up 2.5% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Timken (TKR - Free Report) . Shares have added about 2.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is Timken due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Timken Earnings Beat Estimates in Q4, Increase Y/Y
Timken reported adjusted earnings per share (EPS) of $1.37 in fourth-quarter 2023, beating the Zacks Consensus Estimate of $1.23 per share. The bottom line grew 2% year over year.
On a reported basis, the company delivered earnings of 83 cents per share in the quarter under review compared with $1.32 in the prior-year quarter.
Total revenues in the quarter were $1.09 billion, up 0.8% from the year-ago quarter. The upside can be attributed to the benefit of acquisitions, higher pricing and favorable foreign currency translation, partly offset by lower volume. The top line beat the Zacks Consensus Estimate of $1.06 million.
Costs and Margins
Cost of sales fell 1.8% to $760 million from the prior-year quarter. Gross profit increased 7.6% year over year to $331 million. The gross margin was 30.3% compared with 28.4% a year ago.
Selling, general and administrative expenses rose 13.3% year over year to $190 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 5.1% year over year to $195 million. The adjusted EBITDA margin in the quarter was 17.9% compared with 17.2% in the prior-year quarter.
Segment Performances
The Engineered Bearings segment’s revenues declined 2.4% year over year to $724 million. The decrease was mainly due to lower volumes. These were somewhat offset by higher pricing and the benefits of acquisitions. We expected the segment’s sales to be $710 million in the quarter.
The Engineered Bearings segment’s adjusted EBITDA was $132.5 million compared with the year-ago quarter’s $134.2 million. Our prediction for the segment’s adjusted EBITDA was $129.9 million. The impacts of lower volume, higher manufacturing costs, unfavorable foreign currency, and higher impairment and restructuring charges were partially offset by lower material and logistics costs, and a favorable price/mix.
The Industrial Motion segment’s revenues rose 8% year over year to $367 million in fourth-quarter 2023. The upside was led by higher pricing, the benefits of acquisitions and a favorable currency translation, partially offset by lower volume. The reported figure surpassed our estimate of $343 million. The segment’s adjusted EBITDA was $81.6 million in the fourth quarter of 2023 compared with $64.9 million in the fourth quarter of 2022. We projected an adjusted EBITDA of $61 million for the third quarter of 2023.
Financial Position
Timken had cash and cash equivalents of $419 million at the end of 2023, up from $332 million at the end of 2022. Cash flow from operating activities was $545 million in 2023 compared with $464 million in the prior year.
In the fourth quarter, Timken returned $55.7 million in cash to shareholders through dividends and share repurchases. The long-term debt as of Dec 31, 2023, was $1.79 billion, down from $1.91 billion as of Dec 31, 2022. Net debt to adjusted EBITDA was 2.1 as of Dec 31, 2023.
2023 Performance
Timken reported a record adjusted EPS of $7.05 in 2023, beating the Zacks Consensus Estimate of $6.90 per share. The bottom line increased 9% year over year. On a reported basis, the company delivered earnings of $5.47 per share in 2023 compared with $5.48 per share in 2022.
Total revenues in 2023 were a record $4.77 billion, beating the Zacks Consensus Estimate of $4.73 million. The top line improved 6.1% on a year-over-year basis.
2024 Guidance
Timken expects total revenues to decline 2.5-4.5% from the 2023 reported level. The company anticipates adjusted EPS between $5.80 and $6.20 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -17.05% due to these changes.
VGM Scores
Currently, Timken has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Timken has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Timken (TKR) Up 2.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Timken (TKR - Free Report) . Shares have added about 2.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is Timken due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Timken Earnings Beat Estimates in Q4, Increase Y/Y
Timken reported adjusted earnings per share (EPS) of $1.37 in fourth-quarter 2023, beating the Zacks Consensus Estimate of $1.23 per share. The bottom line grew 2% year over year.
On a reported basis, the company delivered earnings of 83 cents per share in the quarter under review compared with $1.32 in the prior-year quarter.
Total revenues in the quarter were $1.09 billion, up 0.8% from the year-ago quarter. The upside can be attributed to the benefit of acquisitions, higher pricing and favorable foreign currency translation, partly offset by lower volume. The top line beat the Zacks Consensus Estimate of $1.06 million.
Costs and Margins
Cost of sales fell 1.8% to $760 million from the prior-year quarter. Gross profit increased 7.6% year over year to $331 million. The gross margin was 30.3% compared with 28.4% a year ago.
Selling, general and administrative expenses rose 13.3% year over year to $190 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 5.1% year over year to $195 million. The adjusted EBITDA margin in the quarter was 17.9% compared with 17.2% in the prior-year quarter.
Segment Performances
The Engineered Bearings segment’s revenues declined 2.4% year over year to $724 million. The decrease was mainly due to lower volumes. These were somewhat offset by higher pricing and the benefits of acquisitions. We expected the segment’s sales to be $710 million in the quarter.
The Engineered Bearings segment’s adjusted EBITDA was $132.5 million compared with the year-ago quarter’s $134.2 million. Our prediction for the segment’s adjusted EBITDA was $129.9 million. The impacts of lower volume, higher manufacturing costs, unfavorable foreign currency, and higher impairment and restructuring charges were partially offset by lower material and logistics costs, and a favorable price/mix.
The Industrial Motion segment’s revenues rose 8% year over year to $367 million in fourth-quarter 2023. The upside was led by higher pricing, the benefits of acquisitions and a favorable currency translation, partially offset by lower volume. The reported figure surpassed our estimate of $343 million. The segment’s adjusted EBITDA was $81.6 million in the fourth quarter of 2023 compared with $64.9 million in the fourth quarter of 2022. We projected an adjusted EBITDA of $61 million for the third quarter of 2023.
Financial Position
Timken had cash and cash equivalents of $419 million at the end of 2023, up from $332 million at the end of 2022. Cash flow from operating activities was $545 million in 2023 compared with $464 million in the prior year.
In the fourth quarter, Timken returned $55.7 million in cash to shareholders through dividends and share repurchases.
The long-term debt as of Dec 31, 2023, was $1.79 billion, down from $1.91 billion as of Dec 31, 2022. Net debt to adjusted EBITDA was 2.1 as of Dec 31, 2023.
2023 Performance
Timken reported a record adjusted EPS of $7.05 in 2023, beating the Zacks Consensus Estimate of $6.90 per share. The bottom line increased 9% year over year. On a reported basis, the company delivered earnings of $5.47 per share in 2023 compared with $5.48 per share in 2022.
Total revenues in 2023 were a record $4.77 billion, beating the Zacks Consensus Estimate of $4.73 million. The top line improved 6.1% on a year-over-year basis.
2024 Guidance
Timken expects total revenues to decline 2.5-4.5% from the 2023 reported level. The company anticipates adjusted EPS between $5.80 and $6.20 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -17.05% due to these changes.
VGM Scores
Currently, Timken has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Timken has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.