Applied Industrial Exhibits Strong Prospects Amid Persisting Headwinds

Applied Industrial Technologies, Inc. AIT is well-positioned for growth supported by strength across its served markets of machinery, refining, food & beverage, metals, pulp & paper and oil & gas. The strong position in these markets, sales initiatives and focus on national customer accounts are driving the Service Center Based Distribution segment. The increase in demand for technical maintenance, repair and operations (MRO) services across the U.S. manufacturing sector, driven by deferred maintenance activity, is supporting the segment’s revenues as well.

AIT remains focused on strengthening its competency through acquisitions. In May 2025, the company acquired IRIS Factory Automation (IRIS). The acquisition is expected to boost Applied Industrial’s automation offerings and will be integrated into the Engineered Solutions segment.  Applied Industrial’s acquisition of Hydradyne (in January 2025) bolsters its fluid power offerings. It enables the company to create cross-selling opportunities and expand its footprint in the Southeast U.S. region. Applied Industrial expects the buyout to be cash-earnings per share accretive in the first 12 months of possession.

Applied Industrial is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first three months of fiscal 2026, it paid out dividends worth $17.4 million, up 14% on a year-over-year basis. The company hiked its quarterly dividend rate by 24% in January 2025. In April 2025, the company’s board of directors authorized a new share buyback program (replacing the August 2022 share buyback program) to repurchase up to 1.5 million shares of its common stock. As of Sept. 30, 2025, it was left with repurchasing 1,095,864 shares.

AIT’s Price Performance

In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 14.3% compared with the industry’s 9.9% growth.

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Applied Industrial has been witnessing weakness in the Engineered Solutions segment. Unfavorable timing of project-related shipments across flow control and fluid power operations is adversely impacting the performance of the segment. Also, lower demand across end markets, including industrial and mobile fluid power, remains concerning.

Applied Industrial operates across international locations, which exposes it to certain political, environmental and geopolitical issues, as well as currency translation risks. This could affect its performance in the quarters ahead. A stronger U.S. dollar may depress the company's overseas business results in the quarters ahead. While its international operations act as something of a hedge, adverse foreign currency translation lowered the company’s sales by 0.1% year over year in the fiscal first quarter.

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This article originally published on Zacks Investment Research (zacks.com).

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