Cleveland, Ohio-based Parker-Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems. Valued at $108.7 billion by market cap, PH is a leading diversified industrial manufacturer that offers motion-control and fluid systems and industrial components, flight control, hydraulic, fluid conveyance, thermal management, pneumatic, and lubrication systems, and components for aerospace markets.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and PH perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the specialty industrial machinery industry. PH's global presence, with 40% of its business outside the U.S. and a network of 17,100 independent distributors, helps mitigate regional market risks and diversifies revenue streams. Its international operations provide access to emerging markets for potential growth, while strategic management of foreign currency risks through derivatives enhances its global operations.
Despite its notable strength, PH slipped marginally from its 52-week high of $869.36, achieved on Nov. 12. Over the past three months, PH stock gained 12.4%, outperforming the S&P 500 Index’s ($SPX) 5.3% gains during the same time frame.
In the longer term, shares of PH rose 35.5% on a YTD basis and climbed 23.1% over the past 52 weeks, outperforming SPX’s YTD gains of 16.5% and 14.2% returns over the last year.
To confirm the bullish trend, PH has been trading above its 50-day and 200-day moving averages since early May, with slight fluctuations.
Parker-Hannifin outperformed due to strong organic growth, driven by strength in aerospace and defense, and a return to positive territory in North America's industrial operations. Its key factors include commercial and aftermarket aerospace growth, improved productivity, cost controls, and successful integration of Curtis Instruments. The aerospace segment delivered 11 consecutive quarters of double-digit growth, along with strong commercial OEM orders, supported by strong demand in HVAC and filtration markets.
On Nov. 6, PH shares closed up by 7.8% after reporting its Q1 results. Its adjusted EPS of $7.22 exceeded Wall Street expectations of $6.67. The company’s revenue was $5.1 billion, exceeding Wall Street's $4.9 billion forecast. PH expects full-year adjusted EPS in the range of $29.60 to $30.40.
PH’s rival, Xylem Inc. (XYL) shares lagged behind the stock, with a 12% gain over the past 52 weeks and a 21.3% uptick on a YTD basis.
Wall Street analysts are bullish on PH’s prospects. The stock has a consensus “Strong Buy” rating from the 22 analysts covering it, and the mean price target of $911.65 suggests a potential upside of 5.8% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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