Abstract

Applied Industrial will report fiscal results on October 21, 2025, Pre-Market. This preview summarizes last quarter’s delivery, margins, and net profit, and lays out revenue, margin, net profit, and EPS expectations for the new quarter alongside institutional sentiment and business-segment dynamics from January 01, 2025 to October 21, 2025.

Market Forecast

Market consensus for Applied Industrial this quarter points to revenue of $1.17 billion, adjusted EPS of $2.48, and EBIT of $126.50 million, with year-over-year increases of 8.60%, 12.19%, and 11.52%, respectively. Forecast commentary implies a steady gross profit margin near recent run-rate and a stable net profit margin, though explicit YoY comparisons for the two margins are not provided. The company’s core segments—Service Center-based distribution and Fluid Power—are highlighted as maintaining disciplined pricing and backlogs supportive of mid-to-high single-digit revenue growth, with activity steady in core maintenance, repair, and operations demand. The most promising segment is Fluid Power, which captured $417.05 million last quarter and is positioned for outperformance supported by capital projects and systems integration, though explicit YoY data is not available.

Last Quarter Review

Applied Industrial’s last quarter delivered revenue of $1.20 billion, a gross profit margin of 30.13%, GAAP net profit attributable to the parent company of $101.00 million, a net profit margin of 8.40%, and adjusted EPS of $2.63, with year-over-year growth of 9.15% for revenue and 11.44% for EPS. A key highlight was disciplined execution that modestly expanded EBIT year over year as price realization and mix offset input costs, while operating expense control supported margin resilience. Main business contributions were led by Service Center-based distribution at $782.47 million and Fluid Power at $417.05 million; YoY breakouts were not disclosed in the dataset.

Current Quarter Outlook (with major analytical insights)

Service Center-based Distribution

Service Center-based distribution remains the backbone of Applied Industrial’s model, with last quarter’s revenue at $782.47 million. Entering the new quarter, the order cadence implied by the forecast revenue trajectory suggests stable to improving demand across maintenance and OEM accounts, consistent with mid-cycle industrial conditions in the United States. Operating leverage is supported by the mix of value-added services and kitting, which typically cushions category-level price normalization. The margin setup appears balanced: while commodity-linked deflation can weigh on ticket values, inventory discipline and vendor programs often help preserve gross profit dollars, which is consistent with the recent 30.13% gross profit margin run-rate. On the expense line, distribution density and productivity initiatives continue to provide a buffer to protect the 8.40% net margin zone, helping translate steady top-line into durable bottom-line performance.

Fluid Power

Fluid Power posted $417.05 million last quarter and is the franchise with the most visible project pipeline, encompassing engineered systems, motion control, and hydraulics. The revenue estimate for the company implies continued contribution from larger, higher-value projects that typically lift blended gross margins compared with spot distribution activity. This segment’s growth is often tied to industrial automation and modernization projects, areas that tend to be less volatile than pure commodity cycles and carry multi-quarter backlogs. Execution risks typically revolve around project timing and customer readiness; however, the quarter’s revenue forecast and EPS cadence imply constructive throughput, suggesting schedule adherence and a supportive mix of systems integration and aftermarket. If Fluid Power sustains a mix tilt toward engineered solutions, the company could hold gross margin close to or slightly better than the recent average, supporting the EPS estimate of $2.48 even as operating costs normalize to support project delivery.

Stock Price Drivers This Quarter

The most influential stock driver this quarter is the earnings quality versus the headline beat-or-miss, specifically the interplay among revenue, gross profit margin around the 30.13% level, and the net margin trajectory relative to the 8.40% baseline. Investors are likely to focus on the translation of estimated revenue of $1.17 billion into EBIT of $126.50 million and EPS of $2.48, which implies modest operating leverage; any deviation in mix or cost capture could shift EPS several cents. Segment color will be critical: indications that Fluid Power backlogs are expanding or converting more quickly would support the majority bullish view and justify a premium multiple, while any commentary on softening in Service Center ticket counts could prompt caution. Management’s tone on pricing, inventory turns, and capital project timing should frame the guidance corridor for subsequent quarters and inform whether the EPS run-rate can compound in a low double-digit range year over year.

Analyst Opinions

Across recent previews, the majority stance trends bullish, citing solid execution, balanced end-market exposure, and constructive mix benefits in Fluid Power. Analysts highlight the company’s ability to sustain mid-to-high single-digit revenue growth with double-digit EPS expansion, consistent with the current quarter’s estimates of $1.17 billion revenue and $2.48 EPS. Commentary emphasizes disciplined pricing, integration synergies within engineered solutions, and operating expense control as underappreciated supports for margin resilience. Noted institutional voices underscore that the earnings path remains underpinned by steady maintenance, repair, and operations demand, complemented by capital project conversion in Fluid Power, which helps buffer against episodic industrial softness. The consensus tilt is that Applied Industrial can meet or slightly exceed current estimates if margins hold near recent levels and project execution remains timely, reinforcing a generally positive outlook for the print and near-term trend.