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For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Parker-Hannifin Corporation's (NYSE:PH) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Were PH's earnings stronger than its past performances and the industry?
PH's trailing twelve-month earnings (from 31 March 2019) of US$1.5b has jumped 45% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.1%, indicating the rate at which PH is growing has accelerated. How has it been able to do this? Let's see if it is only owing to an industry uplift, or if Parker-Hannifin has experienced some company-specific growth.
In terms of returns from investment, Parker-Hannifin has invested its equity funds well leading to a 24% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 11% exceeds the US Machinery industry of 7.6%, indicating Parker-Hannifin has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Parker-Hannifin’s debt level, has increased over the past 3 years from 13% to 18%.
What does this mean?
Parker-Hannifin's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that have performed well in the past, such as Parker-Hannifin gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Parker-Hannifin to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PH’s future growth? Take a look at our free research report of analyst consensus for PH’s outlook.
- Financial Health: Are PH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.