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5 Reasons Why You Should Buy Parker-Hannifin (PH) Now

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Parker-Hannifin Corporation (PH - Free Report) has been firing on all cylinders of late. The company posted striking quarterly results, beating estimates for the sixth consecutive quarter.

Parker-Hannifin has been driving earnings growth on the back of its revamped Win Strategy, improving demand as well as successful cost-containment actions. Accretive acquisitions have also been driving the company’s momentum. We are highly bullish on the company’s recent notable acquisition of CLARCOR, which the company agreed to buy for roughly $4.3 billion in cash.

The company has also emerged as a solid performer on the bourse recently, rallying a whopping 44.1% over the past one year. The gain is significantly higher than the Zacks classified Manufacturing - General Industrial industry average of 25.7%.

Why is the Stock an Attractive Pick?

Earnings Strength: On the earnings beat front, Parker-Hannifin has had an impressive run. With an average positive surprise of 12.4%, the company has trumped estimates in each of the trailing four quarters.

Moreover, Parker-Hannifin is expected to record an earnings growth rate of 14.2% for the current year, much higher than the industry’s expected growth rate of 9.2%.

Return on Capital: Parker-Hannifin has a return on equity of 12.8%, compared with the industry average of 12.2%.

Price-to-Earnings (P/E) Ratio: Parker-Hannifin’s P/E ratio stands at 22.66 compared with the industry average of 24.38, indicating that the stock is somewhat undervalued despite the recent strong price appreciation.

Price-to-Sales (P/S) Ratio: Parker-Hannifin has a P/S ratio of 1.58, implying that investors are paying investors $1.58 in stock price, for each dollar of revenue generated by the company. This is quite lower than the industry average of 1.93, signaling that the company is undervalued compared to peers.

Upward Estimate Revisions: The company has been witnessing some bullish analyst activity on the earnings estimate revision front lately, with estimates moving north. Over the past couple of months, the company witnessed four upward estimate revisions versus none downward. Consequently, over the past 60 days, the Zacks Consensus Estimate increased 7.6% and 9.4% to $7.38 and $8.34 for 2017 and 2018, respectively. Thanks to this optimistic outlook, Parker-Hannifin sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Parker-Hannifin Corporation Price, Consensus and EPS Surprise

 

Stocks to Consider

Some better-ranked stocks in the Manufacturing - General Industrial industry include Manitex International, Inc. (MNTX - Free Report) , Altra Industrial Motion Corp. and Applied Industrial Technologies Inc. (AIT - Free Report) . While Manitex sports a Zacks Rank #1, both Altra Industrial and Applied Industrial carry a Zacks Rank #2 (Buy).

Manitex International beat estimates by 225% last quarter and has managed to post two massive beats in the trailing four quarters.

Altra Industrial has a positive earnings surprise history, with an average of 12.5% in the trailing four quarters, beating estimates all through.

Applied Industrial Technologies has managed to beat estimates thrice in the past four quarters, for a positive earnings surprise of 6.2%.

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