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Have you been paying attention to shares of Applied Industrial Technologies (AIT)? Shares have been on the move with the stock up 3.5% over the past month. The stock hit a new 52-week high of $109.87 in the previous session. Applied Industrial Technologies has gained 35.2% since the start of the year compared to the 16.7% move for the Zacks Industrial Products sector and the 10.2% return for the Zacks Manufacturing - General Industrial industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2021, Applied Industrial Technologies reported EPS of $1.36 versus consensus estimate of $1.19 while it beat the consensus revenue estimate by 4.56%.
For the current fiscal year, Applied Industrial Technologies is expected to post earnings of $5.41 per share on $3.57 billion in revenues. This represents a 14.14% change in EPS on a 10.4% change in revenues. For the next fiscal year, the company is expected to earn $5.94 per share on $3.73 billion in revenues. This represents a year-over-year change of 9.8% and 4.5%, respectively.
Applied Industrial Technologies may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Applied Industrial Technologies has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 19.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14X versus its peer group's average of 17.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Applied Industrial Technologies currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Applied Industrial Technologies passes the test. Thus, it seems as though Applied Industrial Technologies shares could have a bit more room to run in the near term.
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Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
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