Applied Industrial Technologies (AIT): Evaluating Valuation After Automation Deals, Hydradyne Acquisition and Enhanced Shareholder Returns
Applied Industrial Technologies (AIT) just doubled down on its growth strategy by closing acquisitions of IRIS Factory Automation and Hydradyne, while also rolling out richer shareholder returns through higher dividends and a fresh share repurchase program.
See our latest analysis for Applied Industrial Technologies.
Those moves are landing against a solid backdrop, with the latest share price of $259.48 sitting on an 8.75 percent year to date share price return and an impressive 5 year total shareholder return of 249.57 percent, suggesting momentum is still very much on Applied Industrial Technologies side.
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With shares still below analyst targets but a long rally already behind them, is Applied Industrial Technologies quietly trading at a discount to its next leg of growth, or is the market already pricing in years of expansion?
Most Popular Narrative Narrative: 14.5% Undervalued
With Applied Industrial Technologies last closing at $259.48 versus a narrative fair value near $303, the story is anchored in steady compounding rather than explosive growth.
Analysts are assuming Applied Industrial Technologies's revenue will grow by 4.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.6% today to 9.0% in 3 years time.
To see the math behind that upside, including the earnings climb, the margin lift, and the richer future multiple reflected in this target, read on.
Result: Fair Value of $303.33 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, persistent weakness in legacy end markets, or slower than expected integration of acquisitions like Hydradyne, could quickly challenge this upbeat growth narrative.
Find out about the key risks to this Applied Industrial Technologies narrative.
Another Angle on Valuation
Viewed through its price to earnings ratio, Applied Industrial Technologies no longer screens as cheap. The stock trades at 24.4 times earnings compared to 20.1 times for the broader US Trade Distributors industry and a fair ratio near 21.7. This raises the risk of a sentiment led de rating if growth disappoints.
See what the numbers say about this price — find out in our valuation breakdown.
Build Your Own Applied Industrial Technologies Narrative
If you want to stress test this view or rely on your own research instead, you can build a custom narrative in just a few minutes, Do it your way.
A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Applied Industrial Technologies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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