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Parker Hannifin (PH)
NYSE:PH
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Parker Hannifin
(NYSE:PH)75Outperform
Positive Factors
Earnings Growth
PH’s Win Strategy 3.0 is driving meaningful margin expansion opportunities and its flexible capital deployment strategy positions PH well for outsized earnings growth over time.
Order Growth
Surprise order inflection relative to buy-side expectations gives hope that better demand prospects are on horizon.
Negative Factors
Economic Risks
Continued pressure in certain cyclical components in PH’s portfolio, muted international economic outlook, potential exogenous factors impacting Aero growth, and integration risks as M&A deal size increases pose risks.
Industrial Market Weakness
PH has been seeing delays impacting near-term results in Energy and In-plant industrial equipment, and broader weakness in Transportation and Off-Highway.
Organic Growth
Despite the positive order inflection, PH lowered its FY25 organic growth guide by (250)bps at the midpoint in Industrial NA and by (150)bps at the midpoint in Industrial International.
Parker Hannifin (PH) vs. S&P 500 (SPY)
Market Cap
$80.47B
Dividend Yield1.04%
Average Volume (3M)766.28K
Price to Earnings (P/E)25.9
Beta (1Y)1.18
Revenue Growth0.41%
EPS Growth19.76%
CountryUS
Employees61,120
SectorIndustrials
Sector Strength66
IndustryIndustrial Goods
Share Statistics
EPS (TTM)24.17
Shares Outstanding128,764,850
10 Day Avg. Volume893,212
30 Day Avg. Volume766,279
Financial Highlights & Ratios
PEG Ratio1.31
Price to Book (P/B)N/A
Price to Sales (P/S)4.21
Price to Cash Flow (P/CF)22.40
P/FCF Ratio22.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$760.00Price Target Upside18.74% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Parker Hannifin Business Overview & Revenue Model
Company DescriptionOhio-based Parker-Hannifin Corp. manufactures and sells motion and control technologies and systems. The company provides engineered solutions for mobile, industrial, and aerospace markets. It operates through the following segments: Diversified Industrial and Aerospace Systems.
How the Company Makes MoneyParker Hannifin generates revenue primarily through the sale of its diverse range of motion and control technologies and systems. The company's revenue model is driven by product sales in its two main segments: Diversified Industrial, which encompasses products and services for general industrial and commercial applications, and Aerospace Systems, which provides technologies for aircraft and airline industries. A significant portion of its earnings comes from long-term contracts and partnerships with industrial manufacturers and aerospace companies. Additionally, Parker Hannifin benefits from aftermarket services, offering repair, maintenance, and spare parts, which provide a stable and recurring revenue stream. The company's expansive distribution network and strategic acquisitions also play a crucial role in expanding its market presence and enhancing its revenue potential.
Parker Hannifin Financial Statement Overview
Summary
Parker Hannifin demonstrates a strong financial position with robust profitability, efficient cash generation, and a well-managed balance sheet. The company's consistent revenue growth and high margins underscore its competitive position in the industrial goods sector. While debt levels are significant, they are well-supported by equity and operational performance.Income Statement
Parker Hannifin shows strong financial performance in TTM with a gross profit margin of 35.78% and a high net profit margin of 15.86%. The EBIT margin is robust at 10.43%, and EBITDA margin is solid at 24.16%. Revenue growth is positive with a 4.75% increase from 2023 to 2024, indicating steady demand and operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is stable with a debt-to-equity ratio of 0.64, reflecting manageable leverage. The return on equity is impressive at 22.21%, highlighting strong profitability. The equity ratio of 50.31% signifies a balanced funding structure with a good portion of assets financed by equity.78
Positive
Cash Flow
Parker Hannifin's cash flow is healthy with a 9.21% growth in free cash flow year-over-year. The operating cash flow to net income ratio of 1.18 suggests efficient cash generation from operations. The free cash flow to net income ratio at 1.04 indicates effective conversion of profits to cash.81
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 19.91B | 19.93B | 19.07B | 15.86B | 14.35B | 13.70B | Gross Profit |
| 7.20B | 7.13B | 6.43B | 4.47B | 3.90B | 3.41B | EBIT |
| 4.33B | 3.68B | 1.61B | 1.87B | 2.50B | 1.82B | EBITDA |
| 5.26B | 5.03B | 4.07B | 2.44B | 3.09B | 2.43B | Net Income Common Stockholders |
| 3.16B | 2.84B | 2.08B | 1.32B | 1.75B | 1.20B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 395.51M | 422.03M | 483.57M | 563.66M | 772.23M | 756.32M | Total Assets |
| 28.27B | 29.30B | 29.96B | 25.94B | 20.34B | 19.74B | Total Debt |
| 9.04B | 10.56B | 12.56B | 11.48B | 6.58B | 8.46B | Net Debt |
| 8.65B | 10.14B | 12.08B | 10.94B | 5.85B | 7.78B | Total Liabilities |
| 15.14B | 17.22B | 19.63B | 17.08B | 11.93B | 13.61B | Stockholders Equity |
| 13.12B | 12.07B | 10.33B | 8.85B | 8.40B | 6.11B |
| Cash Flow | Free Cash Flow | ||||
| 3.30B | 2.98B | 2.60B | 2.21B | 2.37B | 1.84B | Operating Cash Flow |
| 3.71B | 3.38B | 2.98B | 2.44B | 2.58B | 2.07B | Investing Cash Flow |
| 244.53M | -298.59M | -8.18B | -418.84M | -13.00K | -5.02B | Financing Cash Flow |
| -3.91B | -3.11B | -971.04M | 3.92B | -2.62B | 449.31M |
Parker Hannifin Technical Analysis
Negative
640.05
Price Trends
663.30
Negative
665.09
Negative
609.54
Positive
Market Momentum
-8.19
Positive
39.71
Neutral
17.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PH, the sentiment is Negative. The current price of 640.05 is below the 20-day moving average (MA) of 673.53, below the 50-day MA of 663.30, and above the 200-day MA of 609.54, indicating a neutral trend. The MACD of -8.19 indicates Positive momentum. The RSI at 39.71 is Neutral, neither overbought nor oversold. The STOCH value of 17.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PH.
Parker Hannifin Risk Analysis
Parker Hannifin disclosed 21 risk factors in its most recent earnings report. Parker Hannifin reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Parker Hannifin Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $74.94B | 21.80 | 110.24% | 2.27% | -1.30% | 20.26% | |
77 Outperform | $25.26B | 9.47 | 38.79% | 1.12% | -2.99% | 159.26% | |
75 Outperform | $80.47B | 25.85 | 24.08% | 1.04% | 0.41% | 19.76% | |
74 Outperform | $64.30B | 27.12 | 9.66% | 1.85% | 10.29% | 22.72% | |
68 Neutral | $135.18B | 23.89 | 33.10% | 2.13% | 5.05% | 2.73% | |
66 Neutral | $30.29B | 33.33 | 26.22% | 1.91% | -11.28% | -23.69% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
PH
Parker Hannifin
640.05
114.33
21.75%
DOV
Dover
189.73
20.64
12.21%
EMR
Emerson Electric Company
115.84
7.99
7.41%
HON
Honeywell International
209.62
13.28
6.76%
ITW
Illinois Tool Works
261.05
6.66
2.62%
ROK
Rockwell Automation
273.66
-12.17
-4.26%
Parker Hannifin Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -3.64% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While the company achieved record operating margins and significant debt reduction, it faced challenges with declining sales and industrial segment pressures. The aerospace segment showed robust growth, contributing positively to overall performance.Highlights
Record Segment Operating Margins
The company achieved a record adjusted segment operating margin of 25.6% with an increase of 110 basis points, and adjusted EBITDA margins also reached a record at 26.8%.
Debt Reduction
Parker-Hannifin reduced its debt by $1.1 billion this quarter, enabled by strong cash flow and divestiture proceeds.
Aerospace Segment Performance
Aerospace sales were a record $1.5 billion, up 14% year-over-year, driven by over 20% growth in aftermarket and mid-single digit growth in OEM.
Positive Order Trends
Order rates increased across all reported businesses in Q2, with aerospace orders up 9% and industrial orders turning positive.
Lowlights
Sales Decline
Overall sales were down 1.6% compared to the prior year, with divestitures negatively impacting by 1.4% and currency by 0.9%.
Industrial Segment Pressure
Industrial North America experienced negative 5% organic growth, and International organic growth was negative 3%, with significant pressure in EMEA at negative 8%.
Weakness in Off-Highway and Automotive Markets
Off-highway markets faced negative mid-teens growth due to OEM destocking and production cuts, while automotive showed weakness leading to a neutral forecast.
Company Guidance
In the Parker-Hannifin Corporation's fiscal 2025 second quarter earnings call, the company provided updated guidance indicating a reported sales growth range of -2% to +1%, with organic growth expected to be around 2% for the fiscal year. Despite a 1.6% decline in sales, including a 1.4% negative impact from divestitures and a 0.9% currency headwind, Parker achieved record adjusted segment operating margins of 25.6%, up 110 basis points year-over-year. Aerospace orders were strong with a 14% increase in sales, contributing to record earnings per share of $6.53, a 6% rise. The company also reduced debt by $1.1 billion and maintained a positive cash flow outlook of $3 billion to $3.3 billion for the year. Looking ahead, Parker expects continued margin expansion driven by its Win strategy, with aerospace growth and a gradual recovery in industrial markets anticipated.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.