$TKR - (The Timken Co.)

I first posted this thesis on my twitter when the stock was around \\\~114/sh. I think it’s a compelling opportunity for people looking to build robotics/physical AI exposure. I’ve copied and pasted that same thesis here if people are interested.

Actuators account for 40%-60% of the entire BOM for a humanoid robot. This is the single largest cost structure in the humanoid/robotics industry. Humanoids have not started scaling yet, but when/if they do, actuators will open up a huge market for hardware suppliers imo. The bet here is scaling of the TAM. Actuators for humanoids and most robots need electric motors and precision gearboxes, $TKR provides the latter.

Specialized and niche precision gearboxes (Harmonic Drives) are an integral part in humanoids' rotary joints—the shoulders, elbows, wrists, and hips—to allow movement. There is a huge shortage of supply for these Harmonic Drives, there's a tall ladder when trying to bring on additional supply capacity with high lead times in tools needed like Multi-axis CNC, High-Rigidity Precision Grinding Machines, material procurement takes 12-16 weeks, and quality assurance taking anywhere from 45 mins- 1 hour per unit. I'm personally betting that there will be a huge increase in demand for harmonic drives as the humanoid industry scales. Currently most of Harmonic drive suppliers are foreign (Harmonic Drive SE/Japan, Nabtesco/Japan) and private/smaller U.S. firms focus more on worm/planetary/slew but not strain-wave harmonic at scale. There is currently only one U.S. based supplier of Harmonic Drives, $TKR. Historically known as a heavy industrial bearing manufacturer, Timken has spent the last several years aggressively acquiring its way into the exact precision motion control niches causing this manufacturing bottleneck. Through its Industrial Motion segment, Timken owns the complete mechanical stack for robotics:

Cone Drive

$TKR acquired this European business in 2018. This is Timken’s direct asset for the bottleneck and why I'm interested in them. Cone Drive manufactures harmonic strain wave gearing (specifically targeting humanoid robotic joints like hips, knees, and wrists) out of U.S.-based manufacturing facilities. Acquiring them makes $TKR effectively the only U.S.-based public supplier of harmonic drives.

SPINEA (Acquired 2022)

Produces cycloidal reduction gears, which provide the high-load rigidity and torque needed for a robot's heavier structural axes (waist and shoulders).

CGI Inc. (Acquired 2024)

Specializes in high-precision, miniaturized gearheads and sub-assemblies historically utilized in surgical robotics and medical devices.

By rolling up Cone Drive, SPINEA, and CGI, Timken operates as a "one-stop shop" capable of supplying precision gear systems across all six axes of a robotic or humanoid actuator. What makes them even more interesting is that the high-growth robotics harmonic drive business is consolidated inside a massive legacy industrial business. Timken operates under two primary reportable segments:

Engineered Bearings (\\\~66% of FY '25 sales): This includes tapered roller bearings, spherical/ cylindrical roller bearings, ball bearings, and related components. Serves diverse end-markets including automotive, off-highway, rail, aerospace, wind energy, and general industrial. Revenue has been relatively stable/flat in recent years, with growth from pricing/mix and select markets (e.g., renewables) offset by softer demand in others. Q4 2025 sales +0.9% YoY; full-year adjusted EBITDA margin \\\~18.9–20.0%.

Industrial Motion (\\\~34% of FY '25 sales): This includes precision gearboxes and gears (via brands like Cone Drive, Spinea, and CGI), drives, breathers, seals, automatic lubrication systems, linear motion products, chain, belts, couplings, and industrial clutches and brakes. This segment has shown stronger growth: +8.4% YoY in Q4 2025 (driven by demand, pricing, FX, and acquisitions) and has delivered double-digit internal CAGR in the automation/robotics end-market since 2018. Adjusted EBITDA margin improved to \\\~19–21% recently (21.0% in Q4 2025).

Peer Comparison

Bearings-heavy peers trade in the 8–12x EV/EBITDA range (e.g., SKF, NTN analogs, or diversified industrials like RRX in power transmission). Precision/aerospace-focused names like RBC Bearings command modest premiums but still align with cyclical industrial multiples rather than secular growth. TKR’s current \\\~12x EV/EBITDA and \\\~2.1x EV/Sales reflect its diversified but mature end-markets (auto, off-highway, rail, wind) and perceived cyclicality — not the high-growth robotics optionality.

In contrast, robotics/humanoids/automation peers Timken trades at a discount. $RRX trades around 15.5x EV/EBITDA, while $MOG.A commands a much higher multiple of 21.3x EV/EBITDA. Timken sits comfortably in the middle. I believe TKR’s humanoid exposure (via the faster-growing Industrial Motion segment) is not yet fully priced in by the market.

In the Q1 2026 earnings call, CEO Lucian Boldea highlighted automation/robotics as a strategic priority where Timken has “doubled down,” delivering double-digit CAGR since 2018. Humanoids are explicitly called out as a high-potential subset addressing labor gaps: "Cone Drive and Spinea provide harmonic/cycloidal drives for joints; Rollon for 7th-axis linear; CGI for medical robotics; Timken bearings and Cone Drive harmonics already present in humanoids/exoskeletons. We are nicely positioned to benefit… We will have our newly appointed Chief Technology Officer talk more at Investor Day about the opportunity.” The company participates in humanoid summits and frames harmonic solutions as core to scaling these platforms. With Industrial Motion already outgrowing the legacy bearings segment and backlog momentum building, the humanoid/robotics tailwind represents asymmetric upside that justifies a valuation re-rating above legacy auto/aerospace multiples — toward robotics/automation peers (15–20x+ EV/EBITDA) as revenue contribution scales.

This is my thesis for $TKR not financial advise. I'm simply jotting down my notes and sharing with you all so maybe you can have a new perspective on the industry or even find critics in the thesis yo may not agree with.