What Does Applied Industrial Technologies, Inc.'s (NYSE:AIT) Share Price Indicate?

By
Simply Wall St
Published
February 16, 2022
NYSE:AIT
Source: Shutterstock

Applied Industrial Technologies, Inc. (NYSE:AIT), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$106 at one point, and dropping to the lows of US$93.56. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Applied Industrial Technologies' current trading price of US$98.36 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Applied Industrial Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Applied Industrial Technologies

What is Applied Industrial Technologies worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.0% below my intrinsic value, which means if you buy Applied Industrial Technologies today, you’d be paying a fair price for it. And if you believe that the stock is really worth $103.52, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Applied Industrial Technologies’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Applied Industrial Technologies generate?

earnings-and-revenue-growth
NYSE:AIT Earnings and Revenue Growth February 16th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Applied Industrial Technologies' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? AIT’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on AIT, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Every company has risks, and we've spotted 2 warning signs for Applied Industrial Technologies you should know about.

If you are no longer interested in Applied Industrial Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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