Zacks Investment Research downgraded Applied Industrial Technologies (AIT) to a Zacks Rank #5 (Strong Sell) on Sep 30, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Shares of Applied Industrial Technologies have lost nearly 5% since the company reported disappointing results for fourth-quarter fiscal 2014 (ended Jun 30, 2014) on Aug 13. Investors are now dubious about the company’s future performance, reflecting the uncertainty through a downward revision in earnings estimates. To justify these reactions, a brief discussion on the quarter’s results is provided below:
Applied Industrial Technologies’ earnings came in at 71 cents per share, down 6.6% year over year and below the Zacks Consensus Estimate of 74 cents. The weak bottom-line performance was due to a 2.8% hike in cost of sales and 3.5% increase in selling, distribution and administrative expenses. Higher costs and expenses more than offset a 2.2% increase in revenues. Operating profit declined 6.7% year over year with a margin of 6.8% versus 7.5% in the year-ago quarter.
Over the last 60 days, the Zacks Consensus Estimate for Applied Industrial Technologies has decreased 3.8% to $3.08 for fiscal 2015 and 11.9% to $3.48 for fiscal 2016.
Other Stocks to Consider
Applied Industrial presently has a market capitalization of $1.9 billion. Some better-ranked stocks in the industry include Blount International Inc. (BLT), Metso Corporation (MXCYY) and Nordson Corporation (NDSN). While Blount International and Metso Corporation sport a Zacks Rank #1 (Strong Buy), Metso Corporation carries a Zacks Rank #2 (Buy).
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