Diversified manufacturing and supply chain services provider Park-Ohio (NASDAQ:PKOH) missed Wall Street’s revenue expectations in Q2 CY2025, with sales falling 7.5% year on year to $400.1 million. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $1.64 billion at the midpoint. Its non-GAAP profit of $0.75 per share was 4.9% above analysts’ consensus estimates.
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Park-Ohio (PKOH) Q2 CY2025 Highlights:
- Revenue: $400.1 million vs analyst estimates of $405.4 million (7.5% year-on-year decline, 1.3% miss)
- Adjusted EPS: $0.75 vs analyst estimates of $0.72 (4.9% beat)
- Adjusted EBITDA: $35.2 million vs analyst estimates of $33.9 million (8.8% margin, 3.8% beat)
- The company dropped its revenue guidance for the full year to $1.64 billion at the midpoint from $1.65 billion, a 0.9% decrease
- Management lowered its full-year Adjusted EPS guidance to $3.05 at the midpoint, a 6.2% decrease
- Operating Margin: 5%, down from 6.3% in the same quarter last year
- Free Cash Flow was -$20.9 million compared to -$10.6 million in the same quarter last year
- Market Capitalization: $216.8 million
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 sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Park-Ohio’s 3.2% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the industrials sector and is a poor baseline 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 recent performance shows its demand has slowed as its revenue was flat over the last two years. 
This quarter, Park-Ohio missed Wall Street’s estimates and reported a rather uninspiring 7.5% year-on-year revenue decline, generating $400.1 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 4.2% over the next 12 months. Although this projection implies its newer products and services will spur better top-line performance, it is still below average for the sector.
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Operating Margin
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 1.8 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Park-Ohio generated an operating margin profit margin of 5%, down 1.3 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
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Park-Ohio’s EPS grew at an astounding 38.4% compounded annual growth rate over the last five years, higher than its 3.2% 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 to better understand the drivers of its performance. As we mentioned earlier, Park-Ohio’s operating margin declined this quarter but expanded by 1.8 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 more recent period because it can provide insight into an emerging theme or development for the business.
For Park-Ohio, its two-year annual EPS growth of 26.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q2, Park-Ohio reported adjusted EPS at $0.75, down from $1.02 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 4.9%. Over the next 12 months, Wall Street expects Park-Ohio’s full-year EPS of $3.15 to grow 5.9%.
Key Takeaways from Park-Ohio’s Q2 Results
We enjoyed seeing Park-Ohio beat analysts’ EBITDA expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, this was a weaker quarter. The stock remained flat at $15.99 immediately following the results.
So should you invest in Park-Ohio right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.