Investors in Applied Industrial Technologies, Inc. (NYSE:AIT) had a good week, as its shares rose 3.9% to close at US$306 following the release of its third-quarter results. It was a workmanlike result, with revenues of US$1.3b coming in 2.1% ahead of expectations, and statutory earnings per share of US$2.65, in line with analyst appraisals. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Applied Industrial Technologies' seven analysts are now forecasting revenues of US$5.18b in 2027. This would be a credible 7.1% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 8.0% to US$11.80. In the lead-up to this report, the analysts had been modelling revenues of US$5.13b and earnings per share (EPS) of US$11.60 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
See our latest analysis for Applied Industrial Technologies
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.2% to US$330. It looks as though they previously had some doubts over whether the business would live up to their expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Applied Industrial Technologies at US$350 per share, while the most bearish prices it at US$317. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Applied Industrial Technologies' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Applied Industrial Technologies' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 5.6% growth on an annualised basis. This is compared to a historical growth rate of 7.6% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.0% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Applied Industrial Technologies.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Applied Industrial Technologies going out to 2028, and you can see them free on our platform here.
You still need to take note of risks, for example - Applied Industrial Technologies has 1 warning sign we think you should be aware of.
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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.