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Parker-Hannifin Gains From End-Market Strength Amid Headwinds
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Parker-Hannifin Corporation (PH - Free Report) has been benefiting from strength in the Aerospace Systems segment, driven by solid momentum in commercial and military end markets. Segmental organic revenues jumped 17.2% year over year in the first quarter of fiscal 2025 (ended Sept. 30, 2024), supported by strength across both OEM and aftermarket channels.
In the quarters ahead, the segment is expected to benefit from solid demand for its products and aftermarket support services in general aviation and military end markets. The company expects the Aerospace Systems segment’s organic sales to increase 10% from the year-ago level in fiscal 2025 (ending June 2025).
The company intends to strengthen and expand its businesses through acquisitions. Its acquisition of Meggitt expanded its presence in the United Kingdom, thereby positioning it well to provide a broader suite of solutions for aircraft and aero-engine components and systems. Acquisitions boosted the company’s sales by 2.6% in fiscal 2024.
The company’s portfolio reshaping actions also include disposing of non-profitable businesses. In November 2024, it divested its composites and fuel containment business for $560 million and a non-core filtration business within the Diversified Industrial Segment for $66 million. This will enable PH to rebalance its portfolio toward its core Aerospace business.
PH remains committed to rewarding its shareholders through dividend payouts. For instance, in fiscal 2024, it rewarded shareholders with dividends of $782 million, indicating an increase of 11% year over year. Also, it hiked its quarterly dividend rate by 10% in April 2024.
PH’s Price Performance
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company's shares have gained 20.9% compared with the industry’s 13.5% growth.
Despite the positives, the company has been witnessing challenging conditions in off-highway and transportation end markets, which have been hurting its Diversified Industrial segment’s performance. The segment’s organic sales fell 4.5% year over year in the first quarter of fiscal 2025.
Also, a weak liquidity position remains a concern for the company. Exiting the fiscal first quarter, the company had cash and cash equivalents of $371.1 million, much lower than its short-term debt of about $3.5 billion.
Stocks to Consider
Some better-ranked companies from the same space are discussed below:
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RBC Bearings Incorporated (RBC - Free Report) presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 2.5%, on average. The consensus estimate for RBC’s 2024 earnings has increased 2.4% in the past 60 days.
Generac Holdings (GNRC - Free Report) presently carries a Zacks Rank of 2. GNRC delivered a trailing four-quarter earnings surprise of 10.8%, on average. The Zacks Consensus Estimate for Generac Holdings’ 2024 earnings has increased 5.1% in the past 60 days.
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Parker-Hannifin Gains From End-Market Strength Amid Headwinds
Parker-Hannifin Corporation (PH - Free Report) has been benefiting from strength in the Aerospace Systems segment, driven by solid momentum in commercial and military end markets. Segmental organic revenues jumped 17.2% year over year in the first quarter of fiscal 2025 (ended Sept. 30, 2024), supported by strength across both OEM and aftermarket channels.
In the quarters ahead, the segment is expected to benefit from solid demand for its products and aftermarket support services in general aviation and military end markets. The company expects the Aerospace Systems segment’s organic sales to increase 10% from the year-ago level in fiscal 2025 (ending June 2025).
The company intends to strengthen and expand its businesses through acquisitions. Its acquisition of Meggitt expanded its presence in the United Kingdom, thereby positioning it well to provide a broader suite of solutions for aircraft and aero-engine components and systems. Acquisitions boosted the company’s sales by 2.6% in fiscal 2024.
The company’s portfolio reshaping actions also include disposing of non-profitable businesses. In November 2024, it divested its composites and fuel containment business for $560 million and a non-core filtration business within the Diversified Industrial Segment for $66 million. This will enable PH to rebalance its portfolio toward its core Aerospace business.
PH remains committed to rewarding its shareholders through dividend payouts. For instance, in fiscal 2024, it rewarded shareholders with dividends of $782 million, indicating an increase of 11% year over year. Also, it hiked its quarterly dividend rate by 10% in April 2024.
PH’s Price Performance
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company's shares have gained 20.9% compared with the industry’s 13.5% growth.
Despite the positives, the company has been witnessing challenging conditions in off-highway and transportation end markets, which have been hurting its Diversified Industrial segment’s performance. The segment’s organic sales fell 4.5% year over year in the first quarter of fiscal 2025.
Also, a weak liquidity position remains a concern for the company. Exiting the fiscal first quarter, the company had cash and cash equivalents of $371.1 million, much lower than its short-term debt of about $3.5 billion.
Stocks to Consider
Some better-ranked companies from the same space are discussed below:
Kadant Inc. (KAI - 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.
It has a trailing four-quarter average earnings surprise of 17.2%. The Zacks Consensus Estimate for KAI’s 2024 earnings has improved 1.8% in the past 60 days.
RBC Bearings Incorporated (RBC - Free Report) presently has a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 2.5%, on average. The consensus estimate for RBC’s 2024 earnings has increased 2.4% in the past 60 days.
Generac Holdings (GNRC - Free Report) presently carries a Zacks Rank of 2. GNRC delivered a trailing four-quarter earnings surprise of 10.8%, on average. The Zacks Consensus Estimate for Generac Holdings’ 2024 earnings has increased 5.1% in the past 60 days.