Applied Industrial Technologies Inc (AIT)
Fair ValueFundamental
73
Price
$331.68
Market Cap
$12.39B
Part 1 · What the company is worth
Overview
Applied Industrial Technologies is a value-added distributor of industrial parts and a provider of technical services, headquartered in Cleveland, Ohio. The 10-K describes a selection of more than 9.4 million stock keeping units — bearings, power transmission components, motors, belting, drives, couplings, pumps, linear motion products, hydraulic and pneumatic components, filtration and hoses, plus flow control and automation technologies. Most of what it sells goes to industrial plants for maintenance, repair and operations (MRO), with a smaller share to original equipment manufacturers. The company operates approximately 580 facilities with roughly 6,900 employees in seven countries, mainly North America plus Australia and New Zealand. Beyond pure distribution it also engineers, designs, integrates and repairs fluid power and automation systems.
How it makes money
Applied buys products from manufacturers and resells them to industrial customers: the revenue is the resale price and the profit is the spread between that price and what it paid, minus the cost of running local branches and inventory. Most orders are small, frequent, unplanned MRO purchases placed through a nearby service center, where availability and technical advice matter more than list price. A second, higher-touch stream comes from engineering, assembling, integrating and repairing fluid power and automation systems, where the company charges for engineering and shop labour as well as parts. The 10-K also discloses purchasing incentives earned from suppliers — volume-linked rebates that depend on how much Applied buys — as a component of profitability that falls when demand softens. Acquisitions of other distributors are a stated part of how the company grows.
Revenue by segment
MRO-focused distribution across North America, Australia and New Zealand through roughly 420 service centers and distribution centers: bearings, motors, belting, drives, couplings, pumps, linear motion products, hydraulic and pneumatic components, filtration supplies and hoses, sold to plant maintenance buyers who need parts locally and quickly.
Distribution, engineering, design, integration and repair of hydraulic and pneumatic fluid power technologies, engineered flow control products and services, and automation technologies, delivered through roughly 160 facilities to industrial, mobile-equipment and technology applications.
Competitive moat
Scale · NarrowThe filing describes a competitive, fragmented industry in which Applied is one of the larger players: roughly 580 facilities, more than 9.4 million stock keeping units, supplier relationships it says are generally good and in many cases decades old, and branches staffed with technical specialists rather than order-takers. In MRO, a plant with a broken machine is buying availability and advice, and the local inventory plus the supplier authorizations behind it are hard for a small competitor to replicate. The advantage is real but bounded: the 10-K itself flags loss of key supplier authorizations, customer and supplier consolidation, and increased competition as risks, and most authorizations are non-exclusive.
What drives demand
Moderately cyclicalDemand tracks how hard its customers' plants are running: the company's own first risk factor is that its business depends heavily on customers' operating levels. That makes it an industrial-cycle business, but a less violent one than capital equipment. Most of what Applied sells is consumed keeping existing machinery alive — a bearing wears out whether or not the economy is good — so the maintenance base does not go to zero in a downturn; what gets deferred first is the discretionary end: capital maintenance projects, upgrades and the engineered, project-driven work. End markets are spread across food processing, chemicals, metals, oil and gas and others, which smooths any single industry's swing.
Key risks
- Demand depends on customers' operating levels — The company states that its business depends heavily on the operating levels of its customers: when plants cut production, they buy fewer replacement parts and defer maintenance, and demand for Applied's products and services falls with them.
- Loss of supplier authorizations or product availability — Applied lists the loss of key supplier authorizations and lack of product availability among its risks. Most of its supplier relationships are non-exclusive and authorizations vary by geography, so a manufacturer changing its distribution strategy can remove a product line Applied's customers were buying.
- Purchasing incentives from suppliers can shrink — The company discloses that the purchasing incentives it earns from product suppliers can be impacted by declining demand. These incentives are tied to how much Applied buys, so a downturn hits profitability twice: lower sales, and a lower rebate rate on what it did buy.
- Cost volatility and pressure on selling prices — Two separate risk factors cover this: volatility in product, energy, labour and other costs, and changes in customer or product mix combined with downward pressure on sales prices. A distributor's profit is the spread, and both sides of that spread can move against it.
- Dependence on information systems and cybersecurity — The company reports that its ability to transact business relies on information systems, and separately that it is vulnerable to the growing threat of computer viruses and intrusion. A disruption or breach could impair operations, expose it to regulatory consequences and damage its reputation.
- Acquisitions may not deliver what was expected — Acquisitions are described as a key component of anticipated growth, and the company flags that integration difficulties could prevent it from realising the expected benefits. It also notes that failure to execute its operational strategies would hurt profitability and competitive position.
- Operations outside the United States, and indebtedness — Operations outside the United States expose the company to global economic, currency and geopolitical conditions. Separately, the company notes that its indebtedness entails debt service commitments that limit financial flexibility.
- Customer credit and supply chain disruption — The company sells largely on unsecured trade credit and flags that customers becoming unable or unwilling to pay would impair collections. It separately flags supply chain disruptions that could raise costs and hinder its ability to fill orders, and interruptions at its headquarters or distribution centres.
Customer concentration
The filing does not disclose a combined share for the largest customers. What it does state is that Applied serves thousands of customers across a wide variety of industries and that no single customer accounts for more than 5% of 2026 sales — so the business is not hostage to any one account, and the concentration question is largely answered in the negative.
The case for
Buyers argue that this is a boring, necessary business with a structural position: plants must keep running, the parts wear out, and someone has to hold the inventory and know which part fits. Applied's roughly 580 locations, 9.4 million SKUs and decades-old supplier authorizations are an asset a new entrant cannot assemble quickly, and the industry is fragmented enough that acquiring smaller distributors — a stated part of the growth plan — keeps adding branches and product lines. Buyers also point to the shift in mix toward Engineered Solutions, the fluid power, flow control and automation work, which sells engineering hours rather than just boxes, and to a customer base spread across thousands of accounts with none above 5% of sales, which limits how badly any single loss can hurt.
The case against
Sellers fear that a distributor's earnings are a thin spread between what it pays and what it charges, and the company's own risk factors say both sides can move: volatility in product, energy and labour costs on one side, downward pressure on sales prices and adverse mix shifts on the other. They note that purchasing incentives from suppliers — profit that arrives because Applied buys a lot — shrink exactly when demand is weak, so a downturn compounds. They point to the dependence on customers' operating levels: this is the industrial cycle with an extra step, and Applied does not control it. And they flag the strategy's own machinery: growth leans on acquisitions that must be integrated, on non-exclusive supplier authorizations that can be withdrawn, and on debt whose service commitments the company lists as a risk.
Generated on September 17, 2026 with claude-haiku-4-5 — shared with all users
Direct competitors
Who this company fights with for the same customers
Generated on September 17, 2026 with claude-haiku-4-5 — shared with all users
Its Motion subsidiary is Applied's closest mirror image, distributing the same bearings, power transmission, fluid power and automation products to the same North American industrial maintenance customers through a comparable network of local service centers.
Competes for the same plant-level MRO and safety spend through local branches and on-site vending programs embedded at the customer's facility.
Sells the same rotating equipment, bearings and power transmission products to North American plant maintenance and OEM buyers, overlapping directly with Applied's service center and flow control businesses.
Competes for the same maintenance, repair and operating spend of North American plants and facilities, with a broad-line catalogue and e-commerce offer that overlaps much of Applied's stocked product range.
Targets the same industrial maintenance and metalworking buyers in North America with a general-line MRO catalogue and vendor-managed inventory programs that compete with Applied's service centers.
A privately held North American distributor of fluid power, hydraulics and motion control that competes head-on with Applied's Engineered Solutions segment for the same OEM and plant engineering projects.
Balance Sheet & Liquidity
Revenue
$4.97B
Trailing 12 months (through 6/30/2026)
Net Income
$415M
Trailing 12 months (through 6/30/2026)
Free Cash Flow
$461M
Total Equity
$1.86B
Total Liabilities
$1.15B
Current Ratio
2.58
Interest Coverage
31.60
Debt/EBITDA
0.79
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$423.17
Current Price
$331.68
Margin of Safety
+21.6%
Fair Value Range
$275.06 - $571.29
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
30.35
ROE
22.3%
P/B Ratio
6.55
P/FCF
26.48
Gross Margin
30.3%
ROIC
18.1%
Profitability Radar
Value Creation (Economic Moat)
ROIC
18.1%
WACC
8.9%
ROIC − WACC
+9.2 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (22)
- EPS shows upward trend
- EPS CAGR 15.19%
- Price CAGR 18.48%
- ROIC 18.1%
- Gross Margin 30.3%
- P/FCF 26.48
- Debt/Equity ratio
- Operating Margin 11.1%
- Positive Free Cash Flow
- CapEx intensity
- Current Ratio
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- ROE 22.2%
- Revenue Growth 5Y 8.9%
- Analyst Consensus 77% Buy
- Earnings Surprise avg 2.9%
- PEG Ratio 1.22
- Earnings Quality (OCF/NI) 1.17
- Share Dilution -2.5%
- Piotroski F-Score 8/9
Failed (5)
- P/B Ratio 6.55
- Low reliance on intangibles
- Price below Graham Number
- DCF valuation (Overvalued)
- Net Margin Trend 8.3% vs 8.6%
Unavailable (1)
- Dividend Payout NaN%
Piotroski F-Score
Strong financial health
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
No institutional filings reported for this company.
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Neil A. Schrimsher | President, CEO & Director | 61 |
| Mr. David K. Wells | VP, CFO, & Treasurer | 62 |
| Mr. Kurt W. Loring | VP & Chief Human Resource Officer | 56 |
| Mr. Richard M. Wagner | Chief Accounting Officer & Controller | 57 |
| Mr. Ryan Dale Cieslak | Vice President of Investor Relations & Treasury | - |
| Mr. Jon S. Ploetz J.D. | VP, General Counsel & Secretary | 52 |
| Ms. Julie A. Kho | Manager of Corporate Communications & Public Relations | - |
| Joe Mangiapane | Managing Director of Australia & New Zealand | - |
Audit Risk
3
Board Risk
2
Compensation Risk
2
Shareholder Rights Risk
9
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2026-08-13
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-04-28
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-08-14
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for AIT, sourced from Markets Gazette.