TIMKEN CO (TKR): what the price assumes

In the published model solve dated 2026-Q2, anchored at $120.82, TIMKEN CO (TKR) is priced for +17.4% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/TKR

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=12)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Timken is a bearings and industrial-motion maker with unusually spread revenue, and the 10-K notes that "No single customer accounts for more than 5% of total net sales", a diversification that showed up in first-quarter 2026 sales up 8% with beats on both lines and full-year adjusted EPS guidance raised to $5.75 to $6.25.
• The biggest risk is the cycle itself: the filing concedes that revenues and earnings move with overall industrial production, and at $137.14 the price already sits about 25% above where peer multiples land and several times above what asset and earnings-power methods support.
• Watch the second-quarter print and tariff flow-through: management's guide embeds a $0.15 per share tariff tailwind and a $0.10 cost-inflation buffer, and the new CEO's first full year is being graded against a raised bar.

Bull Case

The most surprising number in Timken's story right now is a tariff line that points the wrong way. For most industrial manufacturers, 2026 trade policy is a cost; Timken's management guided to an incremental $0.15 per share tailwind from tariffs versus its prior outlook, driven by a lower tariff rate on India and net-positive changes to Section 232 in April, offset only by a $0.10 buffer for potential cost inflation. A century-old American bearings maker positioned so that trade barriers help it is not the obvious narrative, and it compounds the quarter that came with it: adjusted EPS of $1.67 against a $1.51 consensus, revenue of $1.23 billion against $1.17 billion expected, and sales up 8% year over year with 4.3% organic growth.

Management responded by raising the full year twice over: adjusted EPS guidance moved to $5.75 to $6.25, implying 13% growth at the midpoint versus the prior 8%, and organic revenue growth expectations rose to about 3% at the midpoint on a strengthening order book across most end markets. The demand base underneath is deliberately hard to knock over; the 10-K lists end markets spanning renewable energy, automation, rail, aerospace, agriculture, mining, and marine, and states that "No single customer accounts for more than 5% of total net sales". The bolt-on machine keeps running too: the CGI acquisition folded in during 2024 per the 10-K, and Bijur Delimon, an automated lubrication systems maker serving rail, power generation, and mining, was added more recently.

Capital returns are steady in the way long holders want: the quarterly dividend was raised to $0.36 in May 2026, the thirteenth consecutive annual increase, and the share count has drifted down about 1.8% a year over the past four years. With new CEO Lucian Boldea now in the seat and Oppenheimer lifting its target to $147 in June, the bull case is simply momentum plus mix: a diversified industrial delivering double-digit profit growth, guiding higher, and getting a policy tailwind its competitors would trade for.

Bear Case

Bearings are early-cycle machinery components, and Timken's own filing describes the exposure without decoration: customers in its industries "historically have tended to delay large capital projects, including expensive maintenance and upgrades during economic downturns", so that "our revenues and earnings are impacted by overall levels of industrial production". The question a buyer at $137 has to answer is where in that cycle this price sits. The current quarter's evidence, raised guidance, improving order books, favorable currency, and a tariff tailwind, reads like the good part of the cycle, and the market has capitalized it: the stock trades at roughly 31 times trailing earnings against an 18x sector median, and the price requires operating income growth of about 21.5% a year for five years, a pace only about 35% of comparable fast-growers have sustained.

The requirement-versus-demonstrated gap is the spine. Timken has recently delivered that kind of profit growth, which is why the priced-in read lands within range rather than elevated, but delivering it for five consecutive years through whatever industrial production does is a different bet. If growth mean-reverts to the roughly 3% organic revenue pace management itself guides to, the earnings trajectory falls back on margin gains and buybacks, and the 31x trailing multiple compresses toward the sector's 18x. Earnings-power methods, which capitalize the five-year average of operating income with no growth, put the price at about 3.6 times their central estimate; that is the size of the cushion if the cycle stops cooperating.

Cash conversion and the balance sheet narrow the margin for error further. Trailing free cash flow is about $383 million against a $9.6 billion market value, roughly a 4% trailing free-cash-flow yield, thin for a cyclical, and net debt of about $1.7 billion runs around three times trailing operating income with interest covered about five times. None of that is distress, but it means the capital-return streak and the bolt-on acquisition cadence both depend on earnings staying up. A first-year CEO, a guide that already banks a tariff benefit, and end markets the company itself ties to industrial production leave several ways for a within-range price to become an expensive one.

Valuation

At $137.14 (July 10, 2026), the market pays about 19 times Timken's company-wide operating income, which inverts to roughly 21.5% annual operating income growth sustained for five years at a 10.2% cost of capital. Hold the solve loosely, since each point of cost of capital moves the implied growth by nearly seven points. Two reference points frame it: the near-term pace is within what Timken has recently delivered, and about 35% of comparable fast-growers historically sustained it for the full five years. On balance the priced-in assumption reads as within range, a demanding but plausible continuation bet rather than a stretch. One measurement note: the 19x multiple prices the record-basis trailing operating income of about $679 million, while the leverage figures below read the EDGAR quarterly trailing basis of about $565 million; the two bases differ by roughly 20% and are labeled, not interchangeable.

The method families disagree along a familiar seam for a mid-cycle industrial. Peer multiples come closest to the price, with the central read about 25% below it, blending an 18x sector P/E against Timken's own 31x trailing earnings, and a 12x sector EV/EBITDA. Forward-growth methods land about 40% below the price on their central estimates, though holding today's roughly 14x EV/EBITDA flat for five years narrows that gap to about 13%. The stricter frames are much further away: asset-based approaches sit at about a third of the price (book value of $45.69 per share earning a 9.6% trailing return on equity, barely above the 9.3% the models require), and earnings-power approaches at about 28 cents on the dollar, capitalizing five-year average operating income with no growth credit. The pattern says the price is a relative-value story, defensible against how the sector is currently priced, expensive against what the business has demonstrably banked.

The balance sheet carries moderate leverage rather than stress: about $1.7 billion of net debt at roughly three times trailing operating income (EDGAR basis), interest covered about 5.2 times, no cash burn, and a share count shrinking about 1.8% a year. What has to be true at this price is specific: operating income compounding near 20% for five years, against a company guiding to 3% organic revenue growth and a filing that ties earnings to industrial production. The distance between those two statements is the valuation debate in one line.

Catalysts

The May 6, 2026 first-quarter report was the year's inflection so far: adjusted EPS of $1.67 beat consensus by about 11%, revenue of $1.23 billion beat by about 5%, and management raised full-year adjusted EPS guidance to $5.75 to $6.25, a 13% growth midpoint versus the prior 8%, while lifting organic growth expectations to about 3% on a firming order book across most end markets. The second-quarter print, expected in late July or early August, tests whether that order-book improvement is a trend or a restock.

Trade policy is a live swing factor in both directions. The current guide embeds an incremental $0.15 per share tariff tailwind, mostly from the lower tariff rate on India and the April 6 Section 232 changes, hedged by a $0.10 per share buffer for potential cost inflation through year-end. Any reversal in those rates flips the sign on a meaningful slice of this year's guided growth.

The corporate calendar adds three quieter threads: new CEO Lucian Boldea's first full guidance cycle after the 2025 leadership transition, integration of the Bijur Delimon lubrication-systems acquisition that extends the Industrial Motion portfolio into rail, power generation, and mining, and a capital-return cadence that just delivered a thirteenth straight annual dividend increase to $0.36 per quarter in May 2026. Sell-side sentiment has followed the numbers up, with Oppenheimer raising its target to $147 from $137 in early June.

Peer Cohorts (Per Segment, With Filing Citations)

Engineered Bearings (reported)

• RBC (RBC BEARINGS INCORPORATED)
• FY2025 10-K: …who collaborate with our customers to develop bearing and engineered component solutions. The product development cycle can follow many paths, which are dependent on the end market or sales channel. The process normally takes between three and six years from concept to sale depending upon the application and the…
• FY2025 10-K: …specialized bearings that use extremely thin cross sections and give specialized machinery manufacturers many advantages. We produce a general line of industrial ball bearings sold primarily to the aftermarket. Mounted Bearings . Mounted bearings are fully assembled bearings with a wide range of shaft attachment…
• RRX (REGAL REXNORD CORP)
• FY2025 10-K: …critical power transmission components that connect the motor to whatever it is powering, sold as an integrated solution. By engineering our components into solutions, we are able to provide customers with greater reliability, energy efficiency, ease-of-use, and enhanced data analytics, while often also reducing…
• FY2025 10-K: …The segment serves a broad range of markets that include general industrial, metals and mining, energy, discrete automation and commercial HVAC. • The PES segment designs and produces fractional to approximately 5 horsepower AC and DC motors, electronic variable speed controls, electronic drives, fans and blowers, as…
• GTES (Gates Industrial Corporation plc)
• FY2025 10-K: …manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse aftermarket channel customers, and to original equipment manufacturers ("OEM") as specified components, with the majority of our revenue coming from aftermarket channels. Our…
• FY2025 10-K: …to Gates. Within our Power Transmission segment, we offer solutions across the following key application platforms: • Stationary drives: fixed drive systems such as those used in a factory driving a machine or pump, on a grain elevator driving the lift auger or in a distribution center driving automated equipment…
• HLIO (HELIOS TECHNOLOGIES, INC.)
• FY2025 10-K: …seamlessly to develop innovative, industry leading products that address our customers' needs while also addressing the trend toward electrification of machines and full electro-hydraulic system solutions. While the core technology of our products has been critical to our Company's historical success and will remain…
• FY2025 10-K: …region. Our new product initiatives in the Hydraulics segment are focused on expanding our line of electro-hydraulic valves, expanding product lines to new end markets like the data center, and modifying existing products based on customer input to support a wider range of applications. Electronics Electronic…
• MOG-A (MOOG Inc.)
• FY2025 10-K: …and existing fleets. Commercial Aircraft. We design, manufacture and integrate primary and secondary flight-critical control systems and products for various commercial aircraft including widebody, narrowbody, business jets and regional jets for both OEM and aftermarket customers. Our large commercial production…
• FY2025 10-K: …27, 2025. Over-time contract receivables are primarily associated with prime contractors and subcontractors in connection with U.S. Government contracts, as well as commercial aircraft and satellite manufacturers. Amounts billed for over-time contracts to the U.S. Government were $ 1,668 at September 27, 2025 and $…
• EMR (EMERSON ELECTRIC CO.)
• FY2025 10-K: …Emerson Electric Co. 2007 Form 10-K, File No. 1-278, Exhibit 10(h), First Amendment to Emerson Electric Co. Savings Investment Restoration Plan , incorporated by reference to Emerson Electric Co. Form 10-Q for the quarter ended March 31, 2008, File No. 1-278, Exhibit 10.1 and Second Amendment to the Emerson Electric…
• FY2025 10-K: :OperatingSegmentsMember emr:IntelligentDevicesMember emr:AsiaMiddleEastAndAfricaMember emr:MeasurementAndAnalyticalMember 2024-10-01 2025-09-30 0000032604 us-gaap:OperatingSegmentsMember emr:IntelligentDevicesMember srt:EuropeMember emr:MeasurementAndAnalyticalMember 2024-10-01 2025-09-30 0000032604…
• FLS (FLOWSERVE CORP)
• FY2025 10-K: …industry competitors include: Sulzer Pumps; Ebara Corp.; Eagle Burgmann, which is a joint venture of two traditional global seal manufacturers; John Crane Inc., a unit of Smiths Group Plc; Weir Group Plc.; ITT Industries; and KSB SE & Co. KGaA. The pump and mechanical seal industry continues to undergo consolidation,…
• FY2025 10-K: …desalination, etc.) or increase energy productivity (such as LNG, Ethylene cracking, and Hydro cracking, etc.). Lastly, our expertise in flow control management makes us a reliable partner to assist our customers with energy transition - by either making their processes more efficient and sustainable, or by providing…
• ESAB (ESAB Corporation)
• FY2025 10-K: …of the base rate margin, 0.125 % to 0.750 %). Each swing line loan denominated in dollars will bear interest at the base rate plus the applicable interest rate margin. To manage exposures to currency exchange rates and interest rates arising in Long-term debt, the Company has interest rate swap agreements. Refer to…
• FY2025 10-K: …filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting…

Industrial Motion (reported)

• RRX (REGAL REXNORD CORP)
• FY2025 10-K: …28,700 full-time people in its global manufacturing, sales, and service facilities and corporate offices. For the year ended December 31, 2025, we reported annual net sales of $5.9 billion compared to $6.0 billion for the year ended December 31, 2024. Our company is comprised of three operating segments: Automation &…
• FY2025 10-K: …products, including mounted and unmounted bearings, couplings, mechanical power transmission drives and components, gearboxes and gear motors, clutches, brakes, and industrial powertrain components and solutions. Increasingly, the segment produces industrial powertrain solutions, which are integrated sub-systems…
• GTES (Gates Industrial Corporation plc)
• FY2025 10-K: …a variety of industrial and automotive customers. Our industrial OEM customers cover a diverse range of industries and applications and many of our largest OEM customers manufacture construction and agricultural equipment. 32 Table of Contents During Fiscal 2025, we realized modest growth in our aftermarket channel…
• FY2025 10-K: …there continues to be significant demand in our industry for skilled workers, the availability of which is limited in some of the locations in which we operate. It cannot be assured that we will be able to retain all our current senior management personnel and attract and retain other necessary personnel, including…
• HLIO (HELIOS TECHNOLOGIES, INC.)
• FY2025 10-K: …and negatively impact our customers and dealers. We currently have operations located in geographies susceptible to severe weather events, such as hurricanes, floods, earthquakes and tornadoes. A catastrophic event, whether resulting from severe weather or otherwise, could result in the loss of the use of all or a…
• FY2025 10-K: …for diverse end markets, including construction, material handling, agriculture, industrial, mobile, energy, recreational vehicles, marine and health and wellness. We operate under two business segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid…
• RBC (RBC BEARINGS INCORPORATED)
• FY2025 10-K: …supplied to each of our principal markets, we believe we have leading market positions in many of the specialized product markets in which we primarily compete. Financial information regarding geographic areas is set forth in Part II, Item 8, Note 19 of this Annual Report on Form 10-K. Industrial Market (64% of net…
• FY2025 10-K: 52 weeks and fiscal 2024 had 52 weeks. We currently operate under two reportable business segments - Aerospace/Defense and Industrial: ● Aerospace/Defense. This segment represents the end markets for the Company's highly engineered bearings and precision components used in commercial aerospace, defense aerospace,…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.