Applied Industrial Technologies, Inc. AIT is well-poised to benefit from strength across its business, acquisitions, focus on improving the product line and operational excellence. The company remains focused on investing in growth opportunities and solidifying its long-term market position.

AIT has a market capitalization of $9.4 billion and currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the firm for a while now.

Business Strength: Applied Industrial is poised for growth on the back of strength across its served markets of food and beverage, primary metals, utilities, transportation and technology. The strong position in these markets, sales initiatives and ongoing growth across national customer accounts are driving the Service Center Based Distribution segment.

The increase in demand for fluid power MRO services across the U.S. manufacturing sector, driven by growing digitization and higher investment in maintenance operations, is supporting the segment’s revenues. In the first quarter of fiscal 2025 (ended Sept. 30, 2024), the Service Center Based Distribution segment’s revenues inched up 0.4% year over year.

Acquisition Benefits: The company remains focused on acquiring businesses to gain access to new customers and product lines. Applied Industrial’s acquisition of Hydradyne (in January 2025) will bolster its fluid power offerings. It will enable AIT to create cross-selling opportunities and expand its footprint in the Southeast U.S. region.

Applied Industrial expects the buyout to be cash-earnings per share accretive in the first 12 months of possession. The transaction is also expected to add $260 million in sales and $30 million in EBITDA. Also, in May 2024, AIT acquired Grupo Kopar, which expanded its automation platform and extended its footprint into Mexico. In the fiscal first quarter, buyouts had a positive impact of 2% on the company's sales.

Price Performance of AIT

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In the past year, AIT has gained 44.6% compared with the industry’s 8.9% growth.

Business Initiatives: AIT’s focus on improving the product line, increasing value-added services and initiatives to drive operational excellence will boost results in the quarters ahead. Its investments to expand automation, industrial Internet of Things and digital offerings like smart vision and mobile robots also bode well.

Shareholder-Friendly Policies: It remains committed to rewarding its shareholders through dividend payouts and share buybacks. In the first three months of fiscal 2025, it paid out dividends worth $14.2 million, up 4.9% on a year-over-year basis. Also, in fiscal 2024 (ended June 2024), AIT rewarded shareholders with dividends of $55.9 million, up 4.6% year over year.

The company hiked its quarterly dividend rate by 5.7% in January 2024. In August 2022, its board of directors authorized a new share buyback program to repurchase up to 1.5 million shares of its common stock. As of Sept. 30, 2024, it was left with repurchasing 1,050,000 shares.

Estimate Revisions: It’s worth noting that the Zacks Consensus Estimate for AIT’s fiscal 2025 (ending June 2025) earnings is pegged at $9.76 per share, indicating an increase of 0.2% from the 60-day-ago figure. The consensus estimate for fiscal 2026 (ending June 2026) earnings is pegged at $10.59 per share, up 0.1% from the year-ago period.

Other Key Picks

Some other top-ranked companies from the same industry are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 (ending March 2025) earnings has been stable.

Dover Corporation DOV presently carries a Zacks Rank of 2. DOV delivered a trailing four-quarter average earnings surprise of 4%.

In the past 60 days, the consensus estimate for DOV’s 2024 earnings has been stable.

Generac Holdings GNRC presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.8%.

In the past 60 days, the consensus estimate for GNRC’s 2024 earnings has increased 1.6%.

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