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Reasons Why it is Worth Buying Parker-Hannifin (PH) Stock Now
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Parker-Hannifin Corporation (PH - Free Report) currently seems to be an attractive option for investors seeking exposure in the general industrial manufacturing space. Impressive financial performance and hike in projections as well as solid fundamentals enhance the stock’s attractiveness.
The company, with a market capitalization of $41.5 billion, engages in manufacturing and providing motion & control technologies and systems. The company presently has a Zacks Rank #2 (Buy). It belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 34% (with the rank of 86) of more than 250 Zacks industries.
In the past three months, the company’s shares have gained 13.2% compared with the industry’s growth of 13.4%. Notably, the S&P 500 expanded 6.8%, while the sector advanced 7.6% during the same timeframe.
Below we discussed why Parker-Hannifin is a worthy investment option.
Earnings Performance and Projections: The company reported better-than-expected results for the third quarter of fiscal 2021 (ended March 2021). Its earnings beat was 9.60% and sales surprise was 1%. On a year-over-year basis, the bottom line expanded 21.2% on sales and margin growth.
In the quarters ahead, the company is poised to benefit from solid demand, Win Strategy and cost-control measures. For fiscal 2021 (ending June 2021), Parker-Hannifin anticipates adjusted earnings of $14.65-$14.95 per share, higher than the previously mentioned $13.65-$14.15. Sales are expected to increase 4-5% year over year, rising from the earlier mentioned 0.7-2.7%.
Segmental Projections & Cost Measures: In the third quarter of fiscal 2021, the company’s Diversified Industrial segment’s revenues increased 6.4% year over year. The segmental sales from North America decreased 1%, more than offset by International sales’ increase of 17.5%. For fiscal 2021, the company anticipates year-over-year sales growth of 3.5-4.5% for Industrial North America and a 14.5-15.5% rise for Diversified Industrial International.
The company has been benefiting from its cost measures over time. Its discretionary measures yielded gains of $215 million in the first nine months of fiscal 2021, while the same from permanent actions totaled $190 million. For fiscal 2021, the company expects benefits of $225 million from its discretionary actions and $250 million from its permanent cost-saving actions.
Acquired Assets: Parker-Hannifin has been benefiting from synergistic gains from acquired assets. In the first nine months of fiscal 2021, the company used $394 million for making acquisitions.
It is worth mentioning here that Parker-Hannifin added LORD Corporation and Exotic Metals Forming Company in fiscal 2020 (ended June 2020). The LORD Corporation buyout has strengthened Parker-Hannifin’s engineered materials’ product and solution offerings. Then again, Exotic Metals’ acquisition has solidified the company’s aerospace products and solutions.
Shareholders’ Rewards: Parker-Hannifin has been rewarding its shareholders with dividend payments and share buybacks over time. In the first nine months of fiscal 2021, it distributed dividends of $341.3 million to its shareholders, reflecting an increase of 0.3% from the previous year. Notably, the company announced a hike of 17% in its quarterly dividend rate this April.
In addition, the company repurchased shares worth $50 million after reinstating its share buyback program. A healthy cash flow position will likely help it reward its shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $4.23 for the fourth quarter of fiscal 2021 (ending June 2021), reflecting an increase of 6.8% from the 30-day-ago figure.
Also, earnings estimates are pegged at $14.72 for fiscal 2021 (ending June 2021) and $16.86 for fiscal 2022 (ending June 2022), suggesting increases of 3.8% and 4.3% from the 30-day-ago figures, respectively.
In the past 30 days, earnings estimates for these stocks have improved for the current year. Further, earnings surprise for the last reported quarter was 82.81% for Tennant, 44.21% for EnPro Industries and 23.13% for Dover.
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Reasons Why it is Worth Buying Parker-Hannifin (PH) Stock Now
Parker-Hannifin Corporation (PH - Free Report) currently seems to be an attractive option for investors seeking exposure in the general industrial manufacturing space. Impressive financial performance and hike in projections as well as solid fundamentals enhance the stock’s attractiveness.
The company, with a market capitalization of $41.5 billion, engages in manufacturing and providing motion & control technologies and systems. The company presently has a Zacks Rank #2 (Buy). It belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of the Zacks Industrial Products sector. The industry is among the top 34% (with the rank of 86) of more than 250 Zacks industries.
In the past three months, the company’s shares have gained 13.2% compared with the industry’s growth of 13.4%. Notably, the S&P 500 expanded 6.8%, while the sector advanced 7.6% during the same timeframe.
Below we discussed why Parker-Hannifin is a worthy investment option.
Earnings Performance and Projections: The company reported better-than-expected results for the third quarter of fiscal 2021 (ended March 2021). Its earnings beat was 9.60% and sales surprise was 1%. On a year-over-year basis, the bottom line expanded 21.2% on sales and margin growth.
In the quarters ahead, the company is poised to benefit from solid demand, Win Strategy and cost-control measures. For fiscal 2021 (ending June 2021), Parker-Hannifin anticipates adjusted earnings of $14.65-$14.95 per share, higher than the previously mentioned $13.65-$14.15. Sales are expected to increase 4-5% year over year, rising from the earlier mentioned 0.7-2.7%.
Segmental Projections & Cost Measures: In the third quarter of fiscal 2021, the company’s Diversified Industrial segment’s revenues increased 6.4% year over year. The segmental sales from North America decreased 1%, more than offset by International sales’ increase of 17.5%. For fiscal 2021, the company anticipates year-over-year sales growth of 3.5-4.5% for Industrial North America and a 14.5-15.5% rise for Diversified Industrial International.
The company has been benefiting from its cost measures over time. Its discretionary measures yielded gains of $215 million in the first nine months of fiscal 2021, while the same from permanent actions totaled $190 million. For fiscal 2021, the company expects benefits of $225 million from its discretionary actions and $250 million from its permanent cost-saving actions.
Acquired Assets: Parker-Hannifin has been benefiting from synergistic gains from acquired assets. In the first nine months of fiscal 2021, the company used $394 million for making acquisitions.
It is worth mentioning here that Parker-Hannifin added LORD Corporation and Exotic Metals Forming Company in fiscal 2020 (ended June 2020). The LORD Corporation buyout has strengthened Parker-Hannifin’s engineered materials’ product and solution offerings. Then again, Exotic Metals’ acquisition has solidified the company’s aerospace products and solutions.
Shareholders’ Rewards: Parker-Hannifin has been rewarding its shareholders with dividend payments and share buybacks over time. In the first nine months of fiscal 2021, it distributed dividends of $341.3 million to its shareholders, reflecting an increase of 0.3% from the previous year. Notably, the company announced a hike of 17% in its quarterly dividend rate this April.
In addition, the company repurchased shares worth $50 million after reinstating its share buyback program. A healthy cash flow position will likely help it reward its shareholders.
Earnings Estimate Revisions: The company’s earnings estimates have increased in the past 30 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $4.23 for the fourth quarter of fiscal 2021 (ending June 2021), reflecting an increase of 6.8% from the 30-day-ago figure.
ParkerHannifin Corporation Price and Consensus
ParkerHannifin Corporation price-consensus-chart | ParkerHannifin Corporation Quote
Also, earnings estimates are pegged at $14.72 for fiscal 2021 (ending June 2021) and $16.86 for fiscal 2022 (ending June 2022), suggesting increases of 3.8% and 4.3% from the 30-day-ago figures, respectively.
Other Key Picks
Some other top-ranked stocks in the industry are Tennant Company (TNC - Free Report) , EnPro Industries, Inc. (NPO - Free Report) and Dover Corporation (DOV - Free Report) . While Tennant currently sports a Zacks Rank #1 (Strong Buy), both EnPro and Dover carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for these stocks have improved for the current year. Further, earnings surprise for the last reported quarter was 82.81% for Tennant, 44.21% for EnPro Industries and 23.13% for Dover.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>