Parker-Hannifin (PH) Up 35.1% in a Year: Will the Trend Last?
Shares of Parker-Hannifin Corporation PH have rallied 35.1% over the past year, outperforming the industry’s 7.1% rise. The increase can be linked to steady demand across end markets and higher order volumes.
What’s Aiding the Stock?
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 are supporting PH’s Diversified Industrial segment. Robust original equipment manufacturer and Maintenance, Repair and Operations commercial activity and strong aftermarket mixes are aiding the Diversified Industrial segment.
PH’s unique Win Strategy, which focuses on innovation, strategic positioning, distribution growth and incentive plan to drive organic growth, is supporting the company’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.
Parker-Hannifin has been strengthening and expanding its business through asset additions for a while. The company acquired Meggitt plc in September 2022, which expanded Parker-Hannifin’s presence in the UK, positioning it well to provide a broader suite of solutions for aircraft, and aeroengine components and systems.
The company utilizes its cash flow to reward its shareholders through dividend payouts. In fiscal 2023, Parker-Hannifin rewarded its shareholders with dividends of $704.1 million, up 23.6% year over year. The company hiked its dividend by 11% to $1.48 per share in April this year.
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Will the Trend Last?
PH’s effective pricing and supply-chain management actions are likely to be beneficial in the quarters ahead. The company’s strategic shift toward longer-cycle and secular trends revenue mix bodes well for the company.
Also, the five growth drivers, including the Win strategy, macro-CapEx reinvestment, acquisitions and secular growth trends, are expected to aid PH’s performance in the near term.
Zacks Rank & Stocks to Consider
PH currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:
Caterpillar Inc. CAT presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
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 8.3% for 2023. The stock has gained 39.1% in the past year.
A. O. Smith Corp. AOS currently carries a Zacks Rank #2 (Buy). AOS’ earnings surprise in the last four quarters was 10.5%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 2.9% for 2023. The stock has gained 9.7% in the past year.
Alamo Group Inc. ALG presently carries a Zacks Rank of 2. ALG’s earnings surprise in the last four quarters was 13%, on average.
In the past 60 days, estimates for Alamo’s 2023 earnings have increased 1.1%. The stock has gained 22.4% in the past year.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
Parker-Hannifin Corporation (PH) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Alamo Group, Inc. (ALG) : Free Stock Analysis Report
