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Parker-Hannifin (PH) Up 48.5% in a Year: Will the Trend Last?
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Shares of Parker-Hannifin Corporation (PH - Free Report) have increased 48.5% over the past year, outperforming the industry’s 12.4% rise. The increase can be linked to steady demand across end markets and higher order volumes. With healthy fundamentals, this Zacks Rank #3 (Hold) company appears primed for further appreciation.
What’s Aiding the Stock?
Higher demand from distributors and end users across the oil and gas, material handling, cars and light trucks, and farm and agriculture markets in the North American region and increasing sales in Europe and Latin America within the international region are aiding the company’s Diversified Industrial segment. The segment’s revenues increased 3.8% year over year in the first quarter of fiscal 2024 (ended September 2023).
Revenues in the Aerospace Systems segment are being buoyed by higher volume across all businesses, especially the commercial and military aftermarket businesses. In the first quarter of fiscal 2024, the Aerospace Systems’ revenues increased 64.7% year over year.
PH’s unique Win Strategy, which focuses on innovation, strategic positioning, distribution growth and incentive plans to drive organic growth, is supporting its margin performance. In the first three months of fiscal 2024, the company’s adjusted EBITDA margin increased 150 basis points year over year, driven by the benefits of the Win strategy.
Image Source: Zacks Investment Research
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 its presence in the UK, thus positioning it well to provide a broader suite of solutions for aircraft, and aero-engine components and systems. It is worth noting that Meggitt sales of $386 million in the fiscal first quarter aided the Aerospace Systems segment.
Moreover, the company remains committed to boosting shareholders’ value by leveraging strong cash flows. In the first three months of fiscal 2024, Parker-Hannifin paid out cash dividends of $704.05 million, up 11.2% from the year-ago period. In April 2023, PH hiked its dividend by 11% to $1.48 per share (annually: $5.92).
Will the Trend Last?
The company’s effective pricing and supply-chain management actions are likely to be beneficial in the near term. The strategic shift toward longer-cycle and secular trends revenue mix bodes well for Parker-Hannifin.
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 quarters ahead.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 3.1%. The stock has risen 28.1% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The consensus estimate for AIT’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Applied Industrial have jumped 28.2% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 14%.
In the past 60 days, the consensus estimate for A. O. Smith’s 2023 earnings has improved 5%. The stock has risen 33.5% in the past year.
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Parker-Hannifin (PH) Up 48.5% in a Year: Will the Trend Last?
Shares of Parker-Hannifin Corporation (PH - Free Report) have increased 48.5% over the past year, outperforming the industry’s 12.4% rise. The increase can be linked to steady demand across end markets and higher order volumes. With healthy fundamentals, this Zacks Rank #3 (Hold) company appears primed for further appreciation.
What’s Aiding the Stock?
Higher demand from distributors and end users across the oil and gas, material handling, cars and light trucks, and farm and agriculture markets in the North American region and increasing sales in Europe and Latin America within the international region are aiding the company’s Diversified Industrial segment. The segment’s revenues increased 3.8% year over year in the first quarter of fiscal 2024 (ended September 2023).
Revenues in the Aerospace Systems segment are being buoyed by higher volume across all businesses, especially the commercial and military aftermarket businesses. In the first quarter of fiscal 2024, the Aerospace Systems’ revenues increased 64.7% year over year.
PH’s unique Win Strategy, which focuses on innovation, strategic positioning, distribution growth and incentive plans to drive organic growth, is supporting its margin performance. In the first three months of fiscal 2024, the company’s adjusted EBITDA margin increased 150 basis points year over year, driven by the benefits of the Win strategy.
Image Source: Zacks Investment Research
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 its presence in the UK, thus positioning it well to provide a broader suite of solutions for aircraft, and aero-engine components and systems. It is worth noting that Meggitt sales of $386 million in the fiscal first quarter aided the Aerospace Systems segment.
Moreover, the company remains committed to boosting shareholders’ value by leveraging strong cash flows. In the first three months of fiscal 2024, Parker-Hannifin paid out cash dividends of $704.05 million, up 11.2% from the year-ago period. In April 2023, PH hiked its dividend by 11% to $1.48 per share (annually: $5.92).
Will the Trend Last?
The company’s effective pricing and supply-chain management actions are likely to be beneficial in the near term. The strategic shift toward longer-cycle and secular trends revenue mix bodes well for Parker-Hannifin.
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 quarters ahead.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Flowserve Corporation (FLS - Free Report) presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 3.1%. The stock has risen 28.1% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The consensus estimate for AIT’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Applied Industrial have jumped 28.2% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 14%.
In the past 60 days, the consensus estimate for A. O. Smith’s 2023 earnings has improved 5%. The stock has risen 33.5% in the past year.