Applied Industrial Tech (AIT:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Applied Industrial Tech(AIT:NYS)

Industrials:Industrial Distribution

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$68.94 (USD) 08/11/2018

Weighted Valuation
$77.82 (USD)

Overall Rating
Undervalued by 12.9%

Valuation Models Analyst Consensus: $92.00 (USD)
(in order of importance) Comparables: $64.06 (USD)
Adjusted Book Value: $62.82 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (AIT:NYS USD)

Price 68.94
Range 68.64 – 69.82
52 week 59.80 – 81.15
Open 69.82
Vol / Avg. 119298/173976
Mkt cap 2.67B
P/E 17.28
Div/yield 1.18/0.02
EPS 3.61
Shares 38.75M
Beta 1.11

Company Description

Applied Industrial Technologies Inc is a distributor of industrial products to the maintenance, repair, and operations market and the original equipment manufacturing industry. Further, the company provides engineering and design services for industrial and fluid power applications. The products include bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion components, safety products, oilfield supplies, and other industrial and maintenance supplies. Fluid products include hydraulic, pneumatic, lubrication, and filtration systems and components. Applied Industrial Technologies operates primarily in North America, Australia, and New Zealand.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for AIT:NYS

Using a discounted cash flow model we generated an intrinsic value of $105.09 (USD) for AIT:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

AIT:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $105.09 1% 5% 1% 5%
WACC (or Ke) 7.38 $133.74 $86.03
Terminal Growth Rate 2.40 $87.70 $131.22
Tax Rate 0.31 $113.95 $96.23
Cash Flow 381,411,432 $98.76 $111.42
Capital Expenditures -16,242,800 $104.83 $105.35
Long Term Debt 305,019,000 $105.48 $104.70

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $64.06 (USD) for AIT:NYS. We also generated a valuation of $58.98 (USD) using other metrics and comparables.
The comparable companies were DXP Enterprises (DXPE:NAS), HD Supply Holdings (HDS:NAS), MSC Industrial Direct Co (MSM:NYS), SiteOne Landscape Supply (SITE:NYS) and WESCO International (WCC:NYS).

Company AIT:NYS End Date Value
Earnings/Share $3.99 (USD)
Book Value/Share $21.03 (USD)
Sales/Share $78.24 (USD)
Cash Flow/Share $3.75 (USD)
EBITDA/Share $7.09 (USD)
Price Based on Comps Adjustment Factor (%)
$91.37 (USD) 4.6
$82.98 (USD) -30.7
$77.32 (USD) -29.6
$52.48 (USD) -45.0
$91.23 (USD) 5.7
18.21 PE Ratio 22.90 22.54 27.63 13.98 36.98 13.38
3.13 PB Ratio 3.95 1.96 4.29 3.26 9.14 1.08
0.84 PS Ratio 0.99 0.52 1.26 1.43 1.43 0.30
17.53 PCF Ratio 20.54 0.00 13.96 13.53 40.53 14.12
12.40 EV to EBITDA 12.86 10.61 12.88 10.36 21.55 8.90


Using a multiples approach we generated a valuation of  $68.62 (USD) for AIT:NYS

Company AIT:NYS End Date Value
Earnings/Share $3.99 (USD)
Book Value/Share $21.03 (USD)
Sales/Share $78.24 (USD)
Cash Flow/Share $3.75 (USD)
EBITDA/Share $7.09 (USD)
Price Based on Comps Adjustment Factor
$69.37 (USD) 0
$60.60 (USD) 0
$63.85 (USD) 0
$59.99 (USD) 0
$89.29 (USD) 0
Ratios Ratio Average
PE Ratio 17.39
PB Ratio 2.88
PS Ratio 0.82
PCF Ratio 16.00
EV to EBITDA 12.59

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  AIT:NYS for the last 10 years was  2.79

We ran the Adjusted Book Value for  AIT:NYS and generated a book value of  $22.50 (USD)
By multiplying these we get an adjusted valuation of  $62.82 (USD)

Analyst Data

In the Stockcalc database there are 1 analysts that provide a valuation for AIT:NYS. The 1 analysts have a concensus valuation for AIT:NYS for 2019 of $92.00 (USD).

AIT:NYS Applied Industrial Tech

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 2 0 3.6667 Outperform 2018-11-7

Current Price: 68.94 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 4.73 5.13
# EPS Analysts 2 2
Mean Revenue 3,600.00 3,849.60
# Revenue Analysts 1 1
Mean Target Price 92.00
Mean Cash Flow
Mean Net Income 186.40 205.30
Mean Debt Outstanding
Mean Tax Rate 21.90 25.00
Mean Growth Rate 13.00
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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