Value
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 8.8 |
| EV/EBITDA | 1.2 |
| Fwd P/E | 5.6 |
| PEG | 4.1 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.0x
- ▸PEG: 2.44
AIT · Why this verdict
Why Applied Industrial Technologies (AIT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Applied Industrial Technologies is a high-quality industrial distributor with a 9/9 Piotroski score and consistent small earnings beats, but the shares are in a weak trend (momentum 2.0/10) with 12.4% analyst upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business has a 9/9 Piotroski F-Score, a current ratio component of 9.7/10 and best-in-class margins versus peers. Quality breakdown | Piotroski F-Score stays at 8 or above and quality score stays near 6.5. | →Stable |
| CounterFree cash flow is only 79% of net income, flagged as an earnings quality warning, and gross margin scores just 2.1/10. | ||
EPS has met or beaten estimates for 12 straight quarters, with the latest at 2.97 versus 2.89 and a 3.1% average surprise. Avg surprise pct | EPS surprise stays positive at the January 2027 report. | ↓Deteriorating |
| CounterSurprises are small (2.8% latest) and two of the last four quarters were merely in line, hinting at fading upside. | ||
Revenue rose to $1.29B in September 2026 from $1.20B a year earlier, about 7.6% growth, and next-quarter estimates are $1.26B. Revenue quarters | Quarterly revenue holds above $1.2B through the next four quarters. | ↓Deteriorating |
| CounterIndustrial distribution is tied to factory activity, and 88.0% of revenue comes from the United States, so a domestic slowdown hits everything. | ||
Momentum scores only 2.0/10, with an RSI of 28, the price below its 200-day average and falling on-balance volume. Momentum breakdown | Momentum score recovers above 4.5 and RSI returns above 40. | →Stable |
| CounterThe 200-day average is still rising 3.4% over 30 days, so this may be a pullback in an uptrend rather than a lasting downtrend. | ||
The $294.12 price is 12.4% below the $330.60 analyst target, against 7.6% downside to the stop for a reward-to-risk of 1.63. Estimated upside | Shares move toward the $330 target as momentum stabilizes. | →Stable |
| CounterCoverage is light at about 6 analysts, and the forward P/E of 22.2x leaves little margin for an earnings disappointment. | ||
The business has a 9/9 Piotroski F-Score, a current ratio component of 9.7/10 and best-in-class margins versus peers.
→StableQuality breakdown
- Expectation
- Piotroski F-Score stays at 8 or above and quality score stays near 6.5.
CounterFree cash flow is only 79% of net income, flagged as an earnings quality warning, and gross margin scores just 2.1/10.
EPS has met or beaten estimates for 12 straight quarters, with the latest at 2.97 versus 2.89 and a 3.1% average surprise.
↓DeterioratingAvg surprise pct
- Expectation
- EPS surprise stays positive at the January 2027 report.
CounterSurprises are small (2.8% latest) and two of the last four quarters were merely in line, hinting at fading upside.
Revenue rose to $1.29B in September 2026 from $1.20B a year earlier, about 7.6% growth, and next-quarter estimates are $1.26B.
↓DeterioratingRevenue quarters
- Expectation
- Quarterly revenue holds above $1.2B through the next four quarters.
CounterIndustrial distribution is tied to factory activity, and 88.0% of revenue comes from the United States, so a domestic slowdown hits everything.
Momentum scores only 2.0/10, with an RSI of 28, the price below its 200-day average and falling on-balance volume.
→StableMomentum breakdown
- Expectation
- Momentum score recovers above 4.5 and RSI returns above 40.
CounterThe 200-day average is still rising 3.4% over 30 days, so this may be a pullback in an uptrend rather than a lasting downtrend.
The $294.12 price is 12.4% below the $330.60 analyst target, against 7.6% downside to the stop for a reward-to-risk of 1.63.
→StableEstimated upside
- Expectation
- Shares move toward the $330 target as momentum stabilizes.
CounterCoverage is light at about 6 analysts, and the forward P/E of 22.2x leaves little margin for an earnings disappointment.
Per-dimension breakdown
Quality
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.5 |
| ROA | 7.6 |
| Gross margin | 2.1 |
| Op margin | 4.4 |
| Net margin | 4.2 |
| Current ratio | 9.7 |
| FCF quality | 5.9 |
| Moat | 6.9 |
| Piotroski F | 10.0 |
- ▸Earnings quality warning: 79% FCF/NI
- ▸Strong Piotroski F-Score: 9/9
Growth
4.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.4 |
| EPS growth | 4.6 |
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 0.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+3.1%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.6 |
| Price target | 8.4 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (6.0) — signal dampened
- ▸Analyst upside: 28%
Insider
6.5/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 7.5 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $1,291,649 (0.012% of mkt cap)
Peer rank
6.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 7.5 |
| growth rank | 4.2 |
- ▸Best-in-class margins
- ▸Conservative debt levels
Technical
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.5 |
| support resistance | 9.2 |
| 52w position | 5.8 |
| gap | 5.0 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.0 |
| days to cover | 8.3 |
| volatility | 2.3 |
| put call | 3.7 |
| implied vol | 6.6 |
| max pain risk | 7.0 |
| beta | 7.8 |
| debt equity | 9.4 |
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.1 |
| dividend safety | 6.8 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.2<4.5
- ASYMMETRY:1.4<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.42
Upside
+11.6%
Downside
8.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.2<4.5, ASYMMETRY:1.4<1.5@spot) reinforce the read. Current asymmetry R:R is 1.42 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.1, Technical at 7.1, and Risk (lower is worse) at 6.8; the weakest are Momentum at 3.2, Growth at 4.5, and Value at 5.1. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.42 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Balance Sheet Quality
Trip ifPiotroski F-Score falls below 6 from current 9.
- P2Steady Small Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Modest Revenue Recovery
Trip ifQuarterly revenue falls below $1.15B for 2 consecutive quarters.
- P4Weak Price Momentum
Trip ifShare price falls below the $283.87 stop level, a drop of more than 3.5%.
- P5Analyst Target Upside
Trip ifAnalyst target falls below $300, cutting upside to less than 2%.