Why Timken (TKR) Stock is Higher Today

NEW YORK (TheStreet) -- Shares of Timken Co.  (TKR) are up 1.65% to $67.75 after the company raised its full-year earnings from continuing operations, excluding special items, to be in a range of $2.40 to $2.60 per share, compared to its previous estimate ranging from $2.20 to $2.50 per share, excluding steel operations.

Timken also authorized an additional 10 million share buyback program on Thursday.

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Separately, TheStreet Ratings team rates TIMKEN CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIMKEN CO (TKR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TKR's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 1.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 211.97% to $40.20 million when compared to the same quarter last year. In addition, TIMKEN CO has also vastly surpassed the industry average cash flow growth rate of -4.11%.
  • TKR's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • TIMKEN CO has improved earnings per share by 16.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TIMKEN CO reported lower earnings of $2.72 versus $5.05 in the prior year. This year, the market expects an improvement in earnings ($3.83 versus $2.72).
  • You can view the full analysis from the report here: TKR Ratings Report
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