The Timken Company TKR closed its previously announced deal to sell its belts business assets to Gates Industrial Corporation Ltd. GTES. This move will help Timken focus on its core competencies in advanced motion technology.
Timken Belts Business Sale to Boost Margins
Timken inked a deal with Gates on April 29, 2026, to sell its belts business to focus on its strategic priorities and its 80/20 approach to structurally improve margins. The business produces belts used in industrial, commercial and consumer applications.
The company expects this deal to boost its Industrial Motion segment’s adjusted EBITDA margins. The divestiture is anticipated to be accretive to earnings in 2027. Timken will use the proceeds from this transaction to fund its capital allocation priorities.
The deal with Gates will help Timken achieve its 2028 margin targets. The company expects the Industrial Motion segment’s adjusted EBITDA margin to be 25-27% of sales in 2028, suggesting a rise from the 19% reported in 2025. Adjusted earnings per share (EPS) are expected to be $8.50 for 2028, suggesting 55% growth from that reported in 2025.
TKR’s Q2 Performance
Industrial Motion sales jumped 14.6% year over year to $453.9 million. The increase reflected stronger demand across most platforms and end markets, contributions from the Bijur Delimon acquisition, pricing gains and favorable foreign currency translation. Adjusted EBITDA for the segment soared to $105.6 million from $72.6 million in the year-ago quarter. The margin expanded to 23.3% from 18.3%, aided by higher volumes, positive price/mix, tariff refunds and acquisition contributions. These benefits were partly offset by higher operating costs.
Timken reported second-quarter 2026 adjusted earnings of $1.83 per share, up 28.9% year over year. The figure beat the Zacks Consensus Estimate of $1.63 by 12.3%. Consolidated sales increased 7.5% year over year to $1.26 billion and surpassed the Zacks Consensus Estimate of $1.23 billion by 2.6%.
Timken’s Share Price Performance
In the past year, shares of the company have jumped 55.2% compared with the industry’s 44.1% growth.
TKR’s Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Computer and Technology space are Applied Materials AMAT and Analog Devices, Inc. ADI. These three companies also carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Applied Materials has an average trailing four-quarter earnings surprise of 5.4%. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.79 per share. AMAT shares have skyrocketed 137.5% over the past year.
Analog Devices has an average trailing four-quarter earnings surprise of 4.8%. The Zacks Consensus Estimate for Analog Devices’ fiscal 2026 earnings is pegged at $12.96 per share. ADI shares have surged 61.5% in the past year.
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Timken Company (The) (TKR): Free Stock Analysis Report
Analog Devices, Inc. (ADI): Free Stock Analysis Report
Applied Materials, Inc. (AMAT): Free Stock Analysis Report
Gates Industrial Corporation PLC (GTES): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).