Timken Co (NYSE: TKR)

Sector: Industrials Industry: Tools & Accessories CIK: 0000098362
Market Cap 7.37 Bn
P/B 2.31
P/E 25.55
P/S 1.61
ROIC (Qtr) 9.10
Div Yield % 0.00
Rev 1y % (Qtr) 3.48
Total Debt (Qtr) 2.02 Bn
Debt/Equity (Qtr) 0.64
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About

The Timken Company, often simply referred to as Timken, is a major player in the design, manufacture, and marketing of engineered bearings and industrial motion products. With a rich history that spans over a century, the company has established itself as a trusted partner for customers across a multitude of industries. Timken's robust brand portfolio includes Timken, GGB, Philadelphia Gear, Cone Drive, Rollon, Nadella, Diamond, Drives, Groeneveld, BEKA, Des-Case, Lovejoy, and Lagersmit, among others. Timken's primary business activities revolve...

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Investment thesis

Bull case

  • Healthy cash reserves of 365.40M provide 9.39x coverage of short-term debt 38.90M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 554.30M provides exceptional 19.18x coverage of minority interest expenses 28.90M, showing strong core operations.
  • Operating cash flow of 554.30M provides strong 19.59x coverage of stock compensation 28.30M, indicating sustainable incentive practices.
  • Robust free cash flow of 410.60M exceeds capital expenditure of 143.70M by 2.86x, indicating strong organic growth funding capability.
  • Cash position of 365.40M provides exceptional 12.64x coverage of minority interest expenses 28.90M, indicating strong liquidity.

Bear case

  • Operating cash flow of 554.30M barely covers its investment activities of (148.30M), with a coverage ratio of -3.74, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 365.40M against inventory of 1.24B, the 0.29 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 554.30M provides thin coverage of dividend payments of (98.30M) with a -5.64 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 497.40M show weak coverage of depreciation charges of 230.10M, with a 2.16 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 410.60M represents just -1.60x of debt issuance (256.70M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Tools & Accessories
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LECO Lincoln Electric Holdings Inc 21.98 Bn 84.49 8.07 1.24 Bn
2 SNA Snap-on Inc 19.88 Bn 19.55 3.86 1.26 Bn
3 RBC RBC Bearings INC 17.35 Bn 64.59 9.69 1.05 Bn
4 SWK Stanley Black & Decker, Inc. 14.15 Bn 18.59 1.25 6.61 Bn
5 TTC Toro Co 10.72 Bn 37.66 3.24 1.04 Bn
6 TKR Timken Co 7.37 Bn 25.55 1.61 2.02 Bn
7 KMT Kennametal Inc 3.19 Bn 11.94 1.26 0.64 Bn
8 HLMN Hillman Solutions Corp. 1.82 Bn 45.20 1.17 0.76 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.37 2.04
EV to Cash from Ops. EV/CFO 16.46 30.06
EV to Debt EV to Debt 4.51 8.92
EV to EBIT EV/EBIT 18.35 22.41
EV to EBITDA EV/EBITDA 11.84 16.51
EV to Free Cash Flow [EV/FCF] EV/FCF 22.23 27.38
EV to Market Cap EV to Market Cap 1.24 1.07
EV to Revenue EV/Rev 1.99 3.31
Price to Book Value [P/B] P/B 2.31 4.93
Price to Earnings [P/E] P/E 25.55 32.53
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.93 -1.48
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 32.71
Dividend per Basic Share Div per Share (Qtr) 0.00 1.80
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 30.30
Interest Coverage Int. cover (Qtr) 4.51 7.81
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.71 23.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.19 9.42
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -4.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -16.96 52.65
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -5.91 -3.93
EBIT Growth (1y) % EBIT 1y % (Qtr) -16.64 75.65
EBT Growth (1y) % EBT 1y % (Qtr) -17.92 224.80
EPS Growth (1y) % EPS 1y % (Qtr) -17.73 65.63
FCF Growth (1y) % FCF 1y % (Qtr) 27.00 -578.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.29 0.79
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.69 0.84
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.18
Cash Ratio Cash Ratio (Qtr) 0.40 0.44
Current Ratio Curr Ratio (Qtr) 2.82 2.82
Debt to Equity Ratio Debt/Equity (Qtr) 0.64 0.51
Interest Cover Ratio Int Coverage (Qtr) 4.51 7.81
Times Interest Earned Times Interest Earned (Qtr) 4.51 7.81
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.90 14.53
EBIT Margin % EBIT Margin % (Qtr) 10.86 10.09
EBT Margin % EBT Margin % (Qtr) 8.45 8.30
Gross Margin % Gross Margin % (Qtr) 30.40 33.70
Net Profit Margin % Net Margin % (Qtr) 6.30 6.07