Here's Why Investors Should Retain Parker-Hannifin (PH) Stock
Parker-Hannifin Corporation PH is gaining from steady demand across end markets and higher orders despite rising costs and expenses, and forex woes.
Key Factors Driving PH
Business Strength: PH’s Diversified Industrial segment is benefiting from increased productivity & supply-chain improvement in the North American region and margin expansion, driven by productivity improvement and cost control measures in the international region. Robust original equipment manufacturer and Maintenance, Repair and Operations commercial activity is driving the Aerospace Systems segment. Strong aftermarket mixes also aided the segment.
Benefits from Win Strategy: The company’s unique Win Strategy, which focuses on innovation, strategic positioning, distribution growth and incentive plan to drive organic growth, is supporting PH’s margin performance. In fiscal 2023 (ended Jun 30, 2023), the company’s adjusted EBITDA margin increased 100 basis points year over year, driven by the benefits from the Win strategy.
Expansion Efforts: Parker-Hannifin’s expansion initiatives are expected to drive its growth. In September 2022, the company completed the acquisition of Meggitt plc, a global leader in motion and control technologies. The acquisition expanded PH’s presence in the UK, positioning it well to provide a broader suite of solutions for aircraft, and aeroengine components and systems. Thanks to the Meggitt acquisition, the Aerospace Systems segment sales increased approximately 90% year over year in the fiscal fourth quarter.
Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payments and share buybacks. In April 2023, PH hiked its dividend by 11% to $1.48 per share (annually: $5.92). In fiscal 2023, Parker-Hannifin rewarded its shareholders with dividends of $704.1 million, up 23.6% year over year.
In light of the above-mentioned positives, we believe, investors should retain the PH stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company have risen 47.9% in the past year, outperforming the the industry‘s 16.3% growth.
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Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy) and has a trailing four-quarter earnings surprise of 15%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
AIT’s earnings estimates have increased 1.1% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 40.2% in the past year.
Graham Corporation GHM currently sports a Zacks Rank of 1. The company delivered a trailing four-quarter earnings surprise of approximately 243.1%, on average.
In the past 60 days, estimates for Graham’s earnings have increased 66.7% for 2023. The stock has soared 97% in the past year.
Caterpillar Inc. CAT presently carries a Zacks Rank #2 (Buy). CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s earnings have increased 2.2% for 2023. The stock has gained 48.1% in the past year.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
Parker-Hannifin Corporation (PH) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
Graham Corporation (GHM) : Free Stock Analysis Report
