Image source: Timken
Despite posting record revenue and earnings on Thursday, Timken ( Chart TKR - $80.04 0.41 (0.512%) ) is trading near its 52-week low.
The engineered bearings and power transmission product manufacturer founded by Henry Timken in 1899 reported Q4 revenue of $1.01 billion, up 13% from last year, and net income of $62.9 million, or $0.82 per diluted share — $0.78 on an adjusted basis — up 19% from last year.
The street was looking for revenue of $983 million and adjusted EPS of $0.91.
Record annual results
For the full year 2021, Timken reported sales of $4.1 billion and net income of $369.1 million or $4.79 per diluted share, $4.72 on an adjusted basis.
Both top and bottom line numbers represented record annual performance for the company.
Source: The Timken Company
Lagging stock performance does not reflect underlying strength and growth prospects
Image source: BigCharts
Timken stock has been a market laggard, down nearly 27% since its May 2021 peak. The company has suffered from widespread supply chain issues as well as inflationary pressures and labor challenges.
The fundamentals show, however, that the company's stock performance may not be an accurate reflection of its relative operational efficiencies during the pandemic.
Investment thesis
- On the earnings conference call Thursday, CEO Richard Kyle guided analysts to another record revenue and earnings year in 2022.
- Timken invested $148 million in 2021 in capital expenditures in growth areas including renewable energy and marine engineering as well an increase in manufacturing automation.
- The company paid $1.19 in dividends in 2021, its eighth consecutive year of higher annual dividends.
- Between the dividends and 1.25 million repurchased shares, Timken returned $185.2 million in cash to shareholders in 2021.
- Timken is well positioned to benefit from continued recovery in global industrial markets.
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Source: Equities News
