Timken Earnings Preview

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Investors are on the edge of their collective seats, hoping that Timken (NYS: TKR) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings tomorrow. Timken develops, manufactures, markets, and sells products for friction management and power transmission, alloy steels, and steel components.

What analysts say

  • Buy, sell, or hold?: Analysts strongly back Timken, with six of nine rating it a buy and the remainder rating it a hold. Analysts don't like Timken as much as competitor Steel Dynamics overall. Timken's rating hasn't changed over the past three months.
  • Revenue forecasts: On average, analysts predict $1.26 billion in revenue this quarter. That would represent a rise of 24.8% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $1.14 per share. Estimates range from $1.07 to $1.25.

What our community says
CAPS All-Stars are solidly backing the stock with 98.5% awarding it an outperform rating. The community at large backs the All-Stars with 92.9% assigning it a rating of outperform. Fools are bullish on Timken, though the message boards have been quiet lately with only 71 posts in the past 30 days. Even with a robust four out of five stars, Timken's CAPS rating falls a little short of the community's upbeat outlook.

Management
The company upped its gross margin by 2.2 percentage points in the last quarter. Revenue rose 37.3% while cost of sales rose 33.3% to $920.8 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

26.6%

24.8%

25.0%

26.5%

Operating Margin

14.5%

9.7%

11.5%

12.5%

Net Margin

9.0%

8.4%

6.6%

8.5%

One final thing: If you want to keep tabs on Timken movements, and for more analysis on the company, make sure you add it to your watchlist.

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At the time this article was published

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