Timken Co (TKR) stock analysis

P/E above its 5-year median

Timken's P/E of 27.4 is above its own 5-year median of 15.5.

P/E above the industry

Timken's P/E of 27.4 is above the General Industrial Machinery and Equipment median of 26.9.

EV/EBITDA above its 5-year median

Timken's EV/EBITDA of 12.2 is above its 5-year median of 9.4.

P/B below the industry

Timken's price-to-book of 2.40 is below the General Industrial Machinery and Equipment median of 2.84.

Trading above fair value

The share price of $110.56 is above our fair value estimate of $99.30.

Margin of safety under 20%

The price is 11.3% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 0.6% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -9.1% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -4.7% over the last twelve months, against a 5-year average of 0.3% a year.

Growing slower than the industry

Revenue grew 5.9% over the last twelve months; the General Industrial Machinery and Equipment median is 12.4%.

Guidance raised

Timken raised its 2026 revenue outlook on Aug 4, 2026.

Gross margin improving

Gross margin was 31.3% over the last twelve months, against 30.7% a year earlier.

Return on equity under 15%

Return on equity was 8.9% over the last twelve months and averaged 14.7% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 8.3%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Timken's return on equity of 8.9% is below the General Industrial Machinery and Equipment median of 9.9%.

Earnings grew over 5 years

Net income grew 0.3% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 5.9% over the last twelve months, against a 5-year average of 8.1%.

Net margin below the industry

Timken's net margin of 5.9% is below the General Industrial Machinery and Equipment median of 8.0%.

High debt

Debt is 60.6% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 72.7% five years ago to 60.6%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 30.3% of total debt.

Interest well covered

Operating income covers interest expense 5.1 times.

Short-term assets cover short-term debts

Current assets are 2.56 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.25; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Timken paid dividends worth 1.3% of the share price over the last twelve months.

Yield below Treasuries

The 1.3% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Timken yields 1.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 35.2% of net income.

Covered by free cash flow

Dividends take 22.5% of free cash flow.