While the S&P 500 is up 15.2% since April 2026, Timken (currently trading at $114.83 per share) has lagged behind, posting a return of 8.5%. This might have investors contemplating their next move.
Is now the time to buy Timken, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Timken Will Underperform?
We’re cautious about Timken. Here are three reasons why there are better opportunities than TKR, plus one stock we’d rather own.
1. Core Business Falling Behind as Demand Plateaus
We can better understand Engineered Components and Systems companies by analyzing their organic revenue. This metric gives visibility into Timken’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Timken failed to grow its organic revenue. This performance was underwhelming and implies it may need to improve its products, pricing, or go-to-market strategy. It also suggests Timken might have to lean into acquisitions to accelerate growth, which isn’t ideal because M&A can be expensive and risky (integrations often disrupt focus). 
2. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Timken’s unimpressive 5% 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.
3. New Investments Fail to Bear Fruit as ROIC Declines
ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Unfortunately, Timken’s ROIC averaged 4.2 percentage point decreases each year over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.
Final Judgment
Timken falls short of our quality standards. With its shares underperforming the market lately, the stock trades at 18.2× forward P/E (or $114.83 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward a dominant aerospace business that has perfected its M&A strategy.
Stocks We Like More Than Timken
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