Diversified manufacturing and supply chain services provider Park-Ohio (NASDAQ: PKOH) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 4.5% year on year to $398.6 million. The company’s full-year revenue guidance of $1.61 billion at the midpoint came in 1.1% below analysts’ estimates. Its non-GAAP profit of $0.65 per share was 21.7% below analysts’ consensus estimates.

Is now the time to buy Park-Ohio? Find out by accessing our full research report, it’s free for active Edge members.

Company Overview

Based in Cleveland, Park-Ohio (NASDAQ: PKOH) provides supply chain management services, capital equipment, and manufactured components.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Park-Ohio’s 3.9% annualized revenue growth over the last five years was sluggish. 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. Park-Ohio’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 1.8% annually.

This quarter, Park-Ohio missed Wall Street’s estimates and reported a rather uninspiring 4.5% year-on-year revenue decline, generating $398.6 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.

The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Park-Ohio was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.6% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.

On the plus side, Park-Ohio’s operating margin rose by 2.5 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q3, Park-Ohio generated an operating margin profit margin of 4.3%, down 1.8 percentage points year on year. Since Park-Ohio’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

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.

Park-Ohio’s EPS grew at an astounding 83.8% compounded annual growth rate over the last five years, higher than its 3.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Park-Ohio’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Park-Ohio’s operating margin declined this quarter but expanded by 2.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

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

For Park-Ohio, its two-year annual EPS growth of 5.6% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Park-Ohio reported adjusted EPS of $0.65, down from $1.07 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Park-Ohio’s full-year EPS of $2.73 to grow 16.8%.

Key Takeaways from Park-Ohio’s Q3 Results

We struggled to find many positives in these results. Its full-year EPS guidance missed and its revenue fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 9.9% to $19 immediately after reporting.

The latest quarter from Park-Ohio’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. 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 for active Edge members.