Timken (NYSE:TKR) Reports Bullish Q4 CY2025

Industrial component provider Timken (NYSE:TKR) reported revenue ahead of Wall Streets expectations in Q4 CY2025, with sales up 3.5% year on year to $1.11 billion. Its non-GAAP profit of $1.14 per share was 4.9% above analysts’ consensus estimates.

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"We finished the year strong, delivering higher organic sales and cash flow in the fourth quarter versus the prior year," said Lucian Boldea, president and chief executive officer.

Company Overview

Established after the founder noticed the difficulty freight wagons had making sharp turns, Timken (NYSE:TKR) is a provider of industrial parts used across various sectors.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Regrettably, Timken’s sales grew at a tepid 5.5% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Timken’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2% annually.

Timken also reports organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Timken’s organic revenue averaged 3.3% year-on-year declines. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Timken reported modest year-on-year revenue growth of 3.5% but beat Wall Street’s estimates by 3.5%.

Looking ahead, sell-side analysts expect revenue to grow 2.5% over the next 12 months. Although this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.

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Operating Margin

Timken’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 13% over the last five years. This profitability was top-notch for an industrials business, showing it’s an well-run company with an efficient cost structure.

Analyzing the trend in its profitability, Timken’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Timken generated an operating margin profit margin of 9.8%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Timken’s unimpressive 5.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Timken’s two-year annual EPS declines of 12.9% were bad and lower than its two-year revenue losses.

We can take a deeper look into Timken’s earnings to better understand the drivers of its performance. While we mentioned earlier that Timken’s operating margin was flat this quarter, a two-year view shows its margin has declined. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q4, Timken reported adjusted EPS of $1.14, down from $1.16 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 4.9%. Over the next 12 months, Wall Street expects Timken’s full-year EPS of $5.33 to grow 11.6%.

Key Takeaways from Timken’s Q4 Results

We enjoyed seeing Timken beat analysts’ revenue expectations this quarter. We were also glad its organic revenue outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed. Overall, we think this was a mixed quarter. The stock remained flat at $96.38 immediately after reporting.

Timken put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).