Hey everyone thanks for reading my blog. I hope all of you are still making money after a wild week in the markets.
Today I am going to be talking about Applied Industrial Technologies a company I found while scanning the list of top gainers on the NYSE. Friday they had a great day up 17.65% for the day.
This company just came out with some great earnings on Thursday and on a such a bad day the market completely ignored them. It seems on Friday people paid a little more attention and started buying into the stock.
What do they do?
Applied Industrial Technologies, Inc. is a North American distributor of bearings, power transmission components, fluid power components and systems, industrial rubber products, linear components, tools, safety products, general maintenance products and a variety of mill supply products. Fluid power products include hydraulic, pneumatic, lubrication and filtration components and systems. In September 2005, the Company acquired the assets of Spencer Industries, Inc., a fluid power distributor serving the western United States. The business operates as Spencer Fluid Power. In March 2006, it acquired Minnesota Bearing Company, a distributor of bearings, power transmission components and fluid power products. They are in the Consumer Cyclical/Auto and Truck Parts Sector.
How Are They Doing?
I always like to start out by taking a look at a company's latest quarter. This company just came out with there 4th quarter and 2007 year end results. For the year net income rose 19% to 86 million from 72 million the previous year. Net income for the quarter rose 22.2% and EPS for the 4th quarter rose 27.3% to $0.56 from $0.44 the previous year. Even after commenting on how the housing slump has affected there sales they still reaffirmed there guidance for 2008.
Taking a more long term look there yearly income has increased from 2.6 million in 2002 to 86 million in 2007. There EPS went from $0.34 in 2002 to $1.93 in 2007.
Next the amount of stock outstanding has been holding steady at about 43 million shares, something I always like to see. There net cash is all over the board, however considering the rest of the numbers it doesn't seem like to big of a problem. Taking a look at how well they have managed there debt we can see there current ratio is a strong 2.5, way over my minimum 1.0. They also pay a very nice dividend yielding 2%.
How Do They Compare?
Taking a look at how they compare to others in there sector we see there P/E is 15.06 compared to the industry average of 17.82 in 2006. Looking at there Price/Sale they came in at 0.55 compared to 0.76 for the industry. Also there ROE is very strong at 19.33% showing there better at reinvesting there earning then 86% of there competitors. These numbers tell me the street is undervaluing this company.
The Chart
Taking a look at the chart we can see they have been in an uptrend since March. Even after all this volatility they still managed to close above there 50 and 200 day ma. While the 50 day ma is not rising anymore I believe with the earnings they just released the stock will start another long climb.
Considering the fundamental strenght I believe this company has, if I was looking to purchase stock this one would be at the top of the list.
I Am Rating Applied Industrial Technologies (AIT) A Buy
$31.89 (08/13/07)
