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Applied Industrial Down to Strong Sell on Headwind Woes

Zacks Investment Research downgraded Applied Industrial Technologies, Inc.AIT to a Zacks Rank #5 (Strong Sell) on Sep 30, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next three months.

Why the Downgrade?

Market sentiments have been weak for Applied Industrial Technologies, with its share price declining 13.4% since the beginning of 2015. In addition, the company's disappointing results for fourth-quarter fiscal 2015 (ended Jun 2015) failed to generate the much-needed optimism among investors.

Applied Industrial's earnings of 70 cents per share fell short of the year-ago tally of 71 cents as well as the Zacks Consensus Estimate of 74 cents. Revenues were adversely impacted by unfavorable foreign currency movements as well as soft demand from industrial end markets.

Macroeconomic headwinds, characterized by a weak global economic outlook, particularly in China, and soft commodity prices, have been brewing trouble for industrial stocks lately. For fiscal 2016, Applied Industrial Technologies anticipates adverse foreign currency translations and weak equipment demand to impact its revenues and margins.

Bleak prospects have weakened investors' confidence in Applied Industrial Technologies, triggering downward revision in earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for the stock has declined 6.1% to $2.91 per share for fiscal 2016. Also, the company has an Earnings ESP of -3.78% for fiscal 2016 and -4.35% for the first quarter.

Stocks to Consider

Applied Industrial Technologies currently has a market capitalization of $1.5 billion. Better-ranked stocks in the machinery industry include Graco Inc. GGG , Graham Corporation GHM and Luxfer Holdings PLC LXFR . While Graco sports a Zacks Rank #1 (Strong Buy), both Graham Corporation and Luxfer Holdings carry a Zacks Rank #2 (Buy).

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APPLD INDL TECH (AIT): Free Stock Analysis Report

GRACO INC (GGG): Free Stock Analysis Report

GRAHAM CORP (GHM): Free Stock Analysis Report

LUXFER HOLDINGS (LXFR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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