2024-05-21 17:13:23 ET
Summary
- Applied Industrial Technologies is expected to experience a reacceleration in revenue growth due to improving short-cycle indicators and easing year-over-year comparisons.
- The company's strong balance sheet positions it well for potential mergers and acquisitions, complementing its organic growth.
- The stock is trading at a discount compared to its peers, suggesting potential for a P/E multiple re-rating.
Investment Thesis
Applied Industrial Technologies, Inc. ( AIT ) should see a reacceleration in revenue growth as there are improving short-cycle indicators like stabilizing demand trends in the technology vertical, improving order rates in the Engineered Solutions ((ES)) segment, healthy sales pipeline for automation projects, etc. Further, the revenue growth should also benefit from easing Y/Y comparisons starting in Q4 2024. In the medium to long term, secular tailwinds from the recent reshoring trend and megatrends like automation should help revenue growth. Additionally, the company’s strong balance sheet positions it well to pursue M&A, complementing its organic growth....
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Applied Industrial Technologies: Growth Should Accelerate