• If you are wondering whether Applied Industrial Technologies is attractively priced right now, the recent share performance gives you a useful starting point but not the full story.
• The stock last closed at US$259.51, with returns of an 8.1% decline over 7 days, a 0.6% decline over 30 days, broadly flat year to date, a 0.8% decline over 1 year, 82.2% over 3 years and 248.6% over 5 years.
• These mixed shorter term moves, set against much stronger multi year returns, have put valuation in sharper focus for many investors. With that context, it can be helpful to step back from recent price noise and look at what the underlying numbers say about value.
• On Simply Wall St's valuation checks, Applied Industrial Technologies records a value score of 0 out of 6. Next we will run through the different valuation approaches used, then finish with a look at a more complete way to think about valuation beyond just one score.

Applied Industrial Technologies scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Applied Industrial Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those back to a present value.

For Applied Industrial Technologies, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $461 million. Simply Wall St uses analyst estimates where available, then extends the projections. For example, free cash flow for 2028 is projected at $469 million, with a series of annual projections running out to 2035.

After discounting these cash flows back to today, the DCF output suggests an estimated intrinsic value of about US$240.72 per share. Compared with the recent share price of US$259.51, this implies the stock is around 7.8% overvalued according to this model.

On this view, Applied Industrial Technologies looks close to its estimated cash flow value, with only a modest gap between model value and market price.

Result: ABOUT RIGHT

Applied Industrial Technologies is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Applied Industrial Technologies Price vs Earnings

For a profitable business like Applied Industrial Technologies, the P/E ratio is a useful way to see how much you are paying for each dollar of current earnings. Investors typically accept a higher or lower P/E depending on what they expect for future earnings growth and how risky they think those earnings are.

Applied Industrial Technologies currently trades on a P/E of 23.97x. That sits slightly above the Trade Distributors industry average of 22.75x and above the peer average of 20.83x. Simply Wall St also calculates a Fair Ratio of 21.80x, which reflects what its P/E might be based on factors such as earnings growth, profit margin, industry, market cap and company specific risks.

This Fair Ratio gives you a tailored benchmark rather than relying only on broad industry or peer comparisons, which can miss differences in quality, size and risk. Comparing the Fair Ratio of 21.80x with the current P/E of 23.97x suggests the shares trade at a premium to that model based view of fair value.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Applied Industrial Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply the story you believe about a company linked directly to your own numbers for future revenue, earnings, margins and fair value.

On Simply Wall St’s Community page, Narratives let you turn that story into a clear financial forecast, which then produces a fair value that you can compare with the current share price. This can help you judge whether the stock looks attractive or expensive on your terms.

Because Narratives on the platform update when fresh information such as earnings releases or news arrives, your view on Applied Industrial Technologies can stay aligned with the latest data without you rebuilding your thesis from scratch.

For example, one investor might build an Applied Industrial Technologies Narrative that points to a fair value below today’s US$259.51 share price, while another might build one that points to a fair value above it. The difference in those stories and inputs is exactly what makes Narratives useful for clarifying your own decision.

Do you think there's more to the story for Applied Industrial Technologies? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.