Parker-Hannifin Corporation - A Speculative Analysis (NYSE: PH)

Introduction: Welcome back to my weekly stock analysis. Disclaimer: I am not invested in this one. Parker-Hannifin Corporation (NYSE: PH) Sector: Full Time Employees (Industry) Company Strengths & Risks: Parker Hannifin is an American motion and control technologies company. The company is one of the largest regarding motion controls including climate control, electromechanical, filtration, hydraulics, and more. For more information, I direct you here. PH is among the Fortune 500 and the S&P 500. The most recent news was the acquisition of Clarcor in 2016 and a 2013 manufacturing defect on Lockheed Martin’s F-35 Lightning 2. Strengths: - good dividend growth rate - Nice PE ratio (compared to the market) - Low payout ratio - Nice revenue growth Risks: - 5 years dividend growth - Low yield - Low ROA - High debt to ebitda Financial History and numbers PH: Numbers from Seeking Alpha as of Jan 31, 2022 Numbers from Macro Trends as of Jan 31, 2022 Stock PH P/E Ratio 17.5 Stock price $308.56 Current Annual Payout/Share $4.12 Yield 1.34% 5 Yr Div Growth Rate 9.52% 3 Yr Div Growth Rate 10.53% 1 Yr Div Growth Rate 8.52% Years Of Growth 6 Current Payout Ratio 23.59% Free Cash Flow / Share 4.7859 Revenue (ttm) 14.880B Debt / Equity Ratio 0.736 Debt / EBITDA 2.001 EPS 17.63 ROI 12.50% ROA 9.40% These numbers leave stories to unpack. PH chose to keep the dividend at $0.63 in 2015. Otherwise, the dividend history looks pretty good to me. They have at the very least paid a dividend since 1989. The largest drop in dividends that I can see is by a penny or two. PH also has plenty of room to grow with that 23.6% payout ratio. There may be bits to be desired regarding debt ratios but 2.001 is workable. I will now use the 3 year dividend growth rate to project further. Year PH 2022 4.55 2023 5.03 2024 5.56 2025 6.15 For another way, let's use historical payout ratio to project out. YEAR PH EPS Quarterly estimate 2021 4.26 EPS Quarterly estimate 2022 3.93 2021 dividend 4.00 2022 dividend 3.72 Final Thoughts: The first piece to study would be the dividend stand in 2015. This is plausibly explained by the Clarcor acquisition, so I am willing to excuse this. The company did not drop the dividend, not even for covid, so I am willing to overlook this. Next, the Lockheed Martin defect. This is a huge issue. The only upside I see is that Thomas Williams took over the CEO role in 2015. Outside of a revenue dip through 2016, so far, Mr. Williams seems to be steering better, so to speak. Despite all these upsides, I believe that there are better deals in the market right now. PH might be worth looking deeper into, but does not hook me in. Weekly price estimate for a future date, via consulting the crystal ball: Predicted price for PH for Jun 20, 2022: $345.92. There is no factual basis that I will give. I hope someone out there found this post interesting. Please supplement this with your own research. Thank you for reading, please give me feedback so that I can increase my standards for future analysis posts. If I have made a mistake, please correct me. Or if you have one that you want an analysis on, I might pick a comment to do an analysis of if I don't have any spice stored for the week.

back

Parker-Hannifin Corporation - A Speculative Analysis (NYSE: PH)

bullish

Introduction:

Welcome back to my weekly stock analysis. Disclaimer: I am not invested in this one.

Parker-Hannifin Corporation (NYSE: PH)

Sector: Full Time Employees (Industry)

Company Strengths & Risks:

Parker Hannifin is an American motion and control technologies company. The company is one of the largest regarding motion controls including climate control, electromechanical, filtration, hydraulics, and more. For more information, I direct you here. PH is among the Fortune 500 and the S&P 500. The most recent news was the acquisition of Clarcor in 2016 and a 2013 manufacturing defect on Lockheed Martin's F-35 Lightning 2.

Strengths: - good dividend growth rate - Nice PE ratio (compared to the market) - Low payout ratio - Nice revenue growth

Risks: - 5 years dividend growth - Low yield - Low ROA - High debt to ebitda

Financial History and numbers

PH: Numbers from Seeking Alpha as of Jan 31, 2022

Numbers from Macro Trends as of Jan 31, 2022

Stock PH
P/E Ratio 17.5
Stock price $308.56
Current Annual Payout/Share $4.12
Yield 1.34%
5 Yr Div Growth Rate 9.52%
3 Yr Div Growth Rate 10.53%
1 Yr Div Growth Rate 8.52%
Years Of Growth 6
Current Payout Ratio 23.59%
Free Cash Flow / Share 4.7859
Revenue (ttm) 14.880B
Debt / Equity Ratio 0.736
Debt / EBITDA 2.001
EPS 17.63
ROI 12.50%
ROA 9.40%

These numbers leave stories to unpack. PH chose to keep the dividend at $0.63 in 2015. Otherwise, the dividend history looks pretty good to me. They have at the very least paid a dividend since 1989. The largest drop in dividends that I can see is by a penny or two. PH also has plenty of room to grow with that 23.6% payout ratio. There may be bits to be desired regarding debt ratios but 2.001 is workable.

I will now use the 3 year dividend growth rate to project further.

Year PH
2022 4.55
2023 5.03
2024 5.56
2025 6.15

For another way, let's use historical payout ratio to project out.

YEAR PH
EPS Quarterly estimate 2021 4.26
EPS Quarterly estimate 2022 3.93
2021 dividend 4.00
2022 dividend 3.72

Final Thoughts:

The first piece to study would be the dividend stand in 2015. This is plausibly explained by the Clarcor acquisition, so I am willing to excuse this. The company did not drop the dividend, not even for covid, so I am willing to overlook this.

Next, the Lockheed Martin defect. This is a huge issue. The only upside I see is that Thomas Williams took over the CEO role in 2015. Outside of a revenue dip through 2016, so far, Mr. Williams seems to be steering better, so to speak.

Despite all these upsides, I believe that there are better deals in the market right now. PH might be worth looking deeper into, but does not hook me in.

Weekly price estimate for a future date, via consulting the crystal ball: Predicted price for PH for Jun 20, 2022: $345.92. There is no factual basis that I will give.

I hope someone out there found this post interesting. Please supplement this with your own research.

Thank you for reading, please give me feedback so that I can increase my standards for future analysis posts. If I have made a mistake, please correct me. Or if you have one that you want an analysis on, I might pick a comment to do an analysis of if I don't have any spice stored for the week.

read-time
3 min
345.92
Target Price
4/ 10
Confidence
2-6 Months
Timeframe
catalyst icon
Earnings Release
catalyst icon
News
catalyst icon
SEC
Filing
catalyst icon
Sentiment
catalyst icon
Other Catalyst

Access the latest tools and discussion channels with an account

reddit-sentiment

Reddit Sentiment
Analysis

portfolio-balancer

Portfolio Balancer
with brokerages

sec-dashboard

SEC Dashboard
with NLP

*/}aiodd-ad
next