Applied Industrial Technologies, Inc. (NYSE:AIT) just released its latest first-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 2.8% to hit US$748m. Applied Industrial Technologies also reported a statutory profit of US$0.89, which was an impressive 46% above what the analysts had forecast. 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.
After the latest results, the consensus from Applied Industrial Technologies' four analysts is for revenues of US$3.03b in 2021, which would reflect a perceptible 3.4% decline in sales compared to the last year of performance. Per-share earnings are expected to soar 568% to US$3.46. Before this earnings report, the analysts had been forecasting revenues of US$3.01b and earnings per share (EPS) of US$3.05 in 2021. Although the revenue estimates have not really changed, we can see there's been a nice gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target was unchanged at US$76.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Applied Industrial Technologies analyst has a price target of US$76.00 per share, while the most pessimistic values it at US$75.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Applied Industrial Technologies is an easy business to forecast or the the analysts are all using similar assumptions.
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. These estimates imply that sales are expected to slow, with a forecast revenue decline of 3.4%, a significant reduction from annual growth of 7.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.7% annually for the foreseeable future. It's pretty clear that Applied Industrial Technologies' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Applied Industrial Technologies following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Applied Industrial Technologies' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$76.00, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Applied Industrial Technologies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Applied Industrial Technologies going out to 2023, and you can see them free on our platform here..
It is also worth noting that we have found 5 warning signs for Applied Industrial Technologies that you need to take into consideration.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.