Why Is Timken (TKR) Up 3.4% Since Last Earnings Report?

Core Insights - Timken's Q3 2025 adjusted earnings per share (EPS) of $1.37 exceeded the Zacks Consensus Estimate of $1.25, reflecting an 11.4% year-over-year growth driven by favorable pricing and foreign currency translation, despite weak demand in the Industrial Motion segment [3][4] - Total revenues for Q3 2025 reached $1.157 billion, a 2.7% increase from the previous year, surpassing the Zacks Consensus Estimate of $1.125 billion [4] - The company has adjusted its 2025 guidance, expecting total revenues to decline by 0.75% at the midpoint and adjusted EPS to range between $5.20 and $5.30, indicating a year-over-year decline of 9% [12] Financial Performance - The cost of sales increased by 3% to $808 million, while gross profit rose by 1.3% year-over-year to $349 million, resulting in a gross margin of 30.2% [5] - Adjusted EBITDA increased by 6.2% year-over-year to $601.2 million, with an adjusted EBITDA margin of 17.4%, reflecting a 50-basis point expansion from the prior year [6] - Cash flow from operating activities was $201 million in Q3 2025, compared to $123 million in the prior year [10] Segment Analysis - The Engineered Bearings segment reported revenues of $766 million, up 3.4% year-over-year, driven by higher renewable energy demand and improved pricing [7] - The Industrial Motion segment's revenues rose by 1.3% year-over-year to $391 million, supported by the CGI acquisition and favorable currency impacts, although offset by lower services revenue [8] Balance Sheet and Debt - As of September 30, 2025, Timken had cash and cash equivalents of $449 million, an increase from $373 million at the end of 2024 [10] - Long-term debt increased to $2.09 billion from $2.05 billion as of December 31, 2024, with a net debt to adjusted EBITDA ratio of 2.1, within the target range of 1.5-2.5 [11] Market Sentiment - Recent estimates for Timken have shown a downward trend, with the consensus estimate shifting down by 6.92% [13] - The stock currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [15]