For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Applied Industrial Technologies (AIT) ten years ago? It may not have been easy to hold on to AIT for all that time, but if you did, how much would your investment be worth today?
Applied Industrial Technologies' Business In-Depth
With that in mind, let's take a look at Applied Industrial Technologies' main business drivers. Applied Industrial Technologies, Inc. is a distributor of value-added industrial products — including engineered fluid power components, bearings, specialty flow control solutions, power transmission products and miscellaneous industrial supplies. These products are mainly sold to original equipment manufacturers (OEM) and maintenance, repair, and operations (MRO) customers in Australia, North America, Singapore and New Zealand.
The company is also well known in the market for its engineering, design and systems integration services. Moreover, its inventory management solutions and maintenance training services boost the value of end users in the market. The company, founded in 1923, is currently headquartered in Cleveland, OH.
Applied Industrial reports revenues under two business segments — Service Center-Based Distribution, and Fluid Power & Flow Control. A brief discussion on the segments is provided below:
Service Center Based Distribution (66.5% of net revenues in the second quarter of fiscal 2023) segment offers different types of industrial products majorly through service centers in New Zealand, Australia and North America.
This segment also provides services in the oil and gas industry as well as includes operations of fabricated rubber shops (regional) and rubber service field crews. Service offerings of Applied Maintenance Supplies & Solutions come under the ambit of this segment.
Engineered Solutions (formerly Fluid Power & Flow Control segment) (33.5%) segment includes specialized regional companies that offer fluid power components, assembling and designing of fluid power systems, and provides equipment repairing services. These products and services are traded to the end-users directly in the absence of any service centers. In addition, the segment engages in the integration of flow control system, pump repair and others.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Applied Industrial Technologies ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in February 2013 would be worth $3,161.45, or a gain of 216.14%, as of February 17, 2023, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 169.14% and gold's return of 7.83% over the same time frame.
Analysts are forecasting more upside for AIT too. Applied Industrial is poised to benefit from improving its product line and value-added services along with healthy cross-selling actions and growth investments. Break-fix MRO activity, sales process initiatives, ongoing pricing actions, secular growth and robust supply chain investments across the U.S. manufacturing sector are benefitting its Service Center Based Distribution segment. Total revenue growth is anticipated to be 13-15% (5-9% anticipated earlier) from the previous fiscal year for fiscal 2023. Its shareholder-friendly policies are encouraging. Amid these tailwinds, shares of the company have outperformed its industry in the past year. However, increasing selling, distribution and administrative expenses are impacting Applied Industrial’s performance. Supply-chain issues are also worrisome. Forex woes are also expected to hurt performance in the near term. The stock has jumped 17.24% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2023; the consensus estimate has moved up as well.
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