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Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

Timken Remake Still in Act I by Jim McTague

Summary: The world's largest manufacturer of anti-friction bearings, with annual sales reaching $5 billion and a $2.8 billion market cap, is stalling. Timken's (TKR) heavy reliance on the automotive industry, with parts produced by the giant found in every U.S.-made vehicle, has backfired due to motor industry troubles. Yet Timken's plans to become a specialty producer for aerospace, energy and rail equipment have convinced investors to hold the faith. The company reported disappointing earnings of $0.37 a share (down 63%) two weeks ago. Bulls with patience see promising yield from the company's new specialized focus, while more bearish analysts see continuous strain from its ties to the auto business. Bulls like Robert Becker, Senior Vice President at Keeley Asset Management, would like to see Timken become the next Kaydon (KDN). He says, "With 'screaming margins' on specialty products... we are patient." Barron's: They may have to be just that.

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Source: Time Will Tell for Timken - Barron's