Why Is Timken (TKR) Down 2.5% Since Last Earnings Report?

About this update from Timken India Limited

A month has gone by since the last earnings report for Timken (TKR). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Timken due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Timken’s Q3 Earnings Miss, Revenues Dip Y/YTimken reported adjusted earnings per share (EPS) of $1.23 in the third quarter of 2024, which marked a 20.6% year-over-year decline. The bottom line also missed the Zacks Consensus Estimate of earnings of $1.37. The weaker-than-expected results were led by lower volumes and higher costs. On a reported basis, the company delivered earnings of $1.16 per share compared with $1.23 in the prior-year quarter.Total revenues were $1.13 billion, down 1.4% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $1.12 billion.Timken Reports Margin ContractionThe cost of sales dipped 0.6% to $782 million from the prior-year quarter. The gross profit decreased 3% year over year to $344 million. The gross margin was 30.6% compared with 31.1% in the year-ago quarter.Selling, general and administrative expenses were up 5.6% year over year to $189.7 million. Operating income fell 2% year over year to $146 million. Adjusted EBITDA declined 12% year over year to $190 million. The adjusted EBITDA margin was 16.9%, a 200-basis-point contraction from 18.9% in the prior-year quarter.Timken’s Segment Performances in Q3The Engineered Bearings segment’s revenues fell 4.5% year over year to $741 million. This was due to weak end-market demand in Europe and China. Renewable energy witnessed a significant organic decline in the quarter, owing to continued weakness in China. The off-highway, auto/truck and general & heavy industrial sectors also declined, while industrial distribution, aerospace and rail shipments were higher year over year. The Engineered Bearings segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $138 million compared with the year-ago quarter’s $157 million. The decline was due to lower volume and higher logistics and manufacturing costs, offset by favorable price/mix.The Industrial Motion segment’s revenues rose 5.2%...

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