Value
2.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 3.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.0 |
| PEG | 3.7 |
| Analyst target | 3.0 |
- ▸Forward P/E: 29.8x
- ▸PEG: 3.06
- ▸Expensive valuation
AIT · Why this verdict
Why Applied Industrial Technologies (AIT) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Applied Industrial Technologies is a high-quality industrial distribution franchise — earning a perfect 9-out-of-9 Piotroski financial health score and recognized as best-in-class among peers on margins — but the stock trades just 1.2% below its price target with a risk/reward ratio of 0.26-to-1 that is deeply unfavorable for new exposure. Falling on-balance volume and a 2.2x average-volume surge on a recent selloff day introduce a near-term distribution signal that adds caution to an otherwise sound fundamental picture.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 26.8x and a PEG of 2.70, the stock is priced for consistent growth delivery, yet the price target sits just 1.2% above current levels and the risk/reward stands at 0.26-to-1 — a geometry that leaves minimal margin of safety for new buyers. Price targets | Analyst price targets revise at least 10% higher over the next 12 months, restoring a meaningful gap between the current price and fair value and improving the risk/reward above 1.0-to-1. | ↓Deteriorating |
| CounterA perfect Piotroski score and best-in-class peer margins may justify a sustained premium multiple; if earnings continue meeting expectations at a high-quality industrial distributor, the current price may represent a new equilibrium rather than a stretched ceiling. | ||
The company achieved a 9-out-of-9 Piotroski F-Score and ranks best-in-class among peers on margins, reflecting a financially sound and operationally efficient distribution franchise that has consistently generated high-quality returns. Quality breakdown | Operating and net margins hold steady or expand over the next four reported quarters, confirming the quality profile is structural rather than cyclical. | →Stable |
| CounterThe two most recent quarters delivered results exactly in line with estimates after two prior beats — a deceleration in outperformance that may signal the earnings growth engine is leveling off and that the premium quality multiple could come under pressure. | ||
Despite trading above the 200-day moving average, on-balance volume is in a declining trend and a 2.2x average-volume surge occurred on a recent selloff day — a pattern consistent with institutional supply outpacing demand at current price levels. Momentum breakdown | On-balance volume stabilizes and reverses to a rising trend over the next two quarters, confirming that selling pressure has been absorbed and accumulation is resuming. | ↓Deteriorating |
| CounterThe stock maintains a bullish moving-average structure with RSI at 54 and MACD trending constructively; the elevated down-day volume may reflect a one-time technical flush rather than a sustained distribution campaign. | ||
With 88% of revenue tied to the United States, the business has limited insulation from a domestic industrial contraction; a broad-based US slowdown would translate almost entirely into an earnings headwind with minimal geographic offset. Bear case | US industrial production remains positive on a year-over-year basis for at least three consecutive quarters, preventing the concentration from translating into a meaningful revenue headwind. | →Stable |
| CounterA US-centric industrial distributor may disproportionately benefit from near-shoring and domestic manufacturing investment trends, making the high US exposure a structural tailwind rather than a liability in the current environment. | ||
At a forward P/E of 26.8x and a PEG of 2.70, the stock is priced for consistent growth delivery, yet the price target sits just 1.2% above current levels and the risk/reward stands at 0.26-to-1 — a geometry that leaves minimal margin of safety for new buyers.
↓DeterioratingPrice targets
- Expectation
- Analyst price targets revise at least 10% higher over the next 12 months, restoring a meaningful gap between the current price and fair value and improving the risk/reward above 1.0-to-1.
CounterA perfect Piotroski score and best-in-class peer margins may justify a sustained premium multiple; if earnings continue meeting expectations at a high-quality industrial distributor, the current price may represent a new equilibrium rather than a stretched ceiling.
The company achieved a 9-out-of-9 Piotroski F-Score and ranks best-in-class among peers on margins, reflecting a financially sound and operationally efficient distribution franchise that has consistently generated high-quality returns.
→StableQuality breakdown
- Expectation
- Operating and net margins hold steady or expand over the next four reported quarters, confirming the quality profile is structural rather than cyclical.
CounterThe two most recent quarters delivered results exactly in line with estimates after two prior beats — a deceleration in outperformance that may signal the earnings growth engine is leveling off and that the premium quality multiple could come under pressure.
Despite trading above the 200-day moving average, on-balance volume is in a declining trend and a 2.2x average-volume surge occurred on a recent selloff day — a pattern consistent with institutional supply outpacing demand at current price levels.
↓DeterioratingMomentum breakdown
- Expectation
- On-balance volume stabilizes and reverses to a rising trend over the next two quarters, confirming that selling pressure has been absorbed and accumulation is resuming.
CounterThe stock maintains a bullish moving-average structure with RSI at 54 and MACD trending constructively; the elevated down-day volume may reflect a one-time technical flush rather than a sustained distribution campaign.
With 88% of revenue tied to the United States, the business has limited insulation from a domestic industrial contraction; a broad-based US slowdown would translate almost entirely into an earnings headwind with minimal geographic offset.
→StableBear case
- Expectation
- US industrial production remains positive on a year-over-year basis for at least three consecutive quarters, preventing the concentration from translating into a meaningful revenue headwind.
CounterA US-centric industrial distributor may disproportionately benefit from near-shoring and domestic manufacturing investment trends, making the high US exposure a structural tailwind rather than a liability in the current environment.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.3 |
| ROA | 7.2 |
| Gross margin | 2.1 |
| Op margin | 4.4 |
| Net margin | 4.2 |
| Current ratio | 9.8 |
| FCF quality | 6.1 |
| Moat | 6.9 |
| Piotroski F | 10.0 |
- ▸Strong Piotroski F-Score: 9/9
Growth
3.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.3 |
| EPS growth | 2.6 |
Momentum
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 3.8 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 8.5 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.4 |
| Analyst rating | 5.0 |
| Price target | 5.1 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $1,268,427 (0.010% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.0 |
| quality rank | 7.5 |
| growth rank | 3.9 |
- ▸Best-in-class margins
Technical
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.2 |
| support resistance | 3.5 |
| 52w position | 9.1 |
| gap | 4.0 |
Risk (lower is worse)
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 8.2 |
| volatility | 6.1 |
| put call | 10.0 |
| implied vol | 6.9 |
| beta | 7.9 |
| debt equity | 9.2 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.2 |
| dividend safety | 6.8 |
| news activity | 8.0 |
- ▸Earnings in 0 days
How the verdict was assembled
Engine trigger
Earnings in 0 days. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (6)
- MOMENTUM:5.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.60
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.4=NEGATIVE
- EARNINGS_PROXIMITY:0d<=7d
Warning (0)
none
Reward-to-Risk
-1.39
Upside
-12.4%
Downside
8.9%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings in 0 days. Wait until post-earnings. The 10-dimension scores remain Risk (lower is worse) at 8.2 (strongest), but ASYMMETRY:-1.4=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Risk (lower is worse) at 8.2, Insider at 7.3, and Catalyst at 6.5; the weakest are Value at 2.9, Growth at 3.5, and Technical at 4.7. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.39 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Stretched Valuation Unfavorable Risk Reward
Trip ifForward P/E compresses below 20x from the current 26.8x, indicating either a meaningful price correction or accelerating earnings growth that restores valuation discipline.
- P2Piotroski Perfect Score Best In Class Margins
Trip ifPiotroski F-Score falls below 7 for 2 consecutive measurement periods.
- P3Bearish Volume Distribution Signal
Trip ifOn-balance volume reverses to a rising trend and the stock closes above $325 on daily volume exceeding 1.5x the 30-day average for 3 consecutive sessions, confirming accumulation has resumed.
- P4Heavy Us Geographic Concentration
Trip ifUS revenue share falls below 80% for 2 consecutive annual reporting periods, indicating meaningful geographic diversification that reduces concentration exposure.