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Parker-Hannifin Stock Analysis

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This is an introduction to my Parker-Hannifin stock analysis which is based on Q2 2018 results and projections for the remainder of FY2018.

Summary

  • Parker-Hannifin is a Dividend King having increased its annual dividend for at least 50 consecutive years.
  • While the diluted - weighted-average common shares outstanding has been reduced dramatically since FY2008 and EPS has grown significantly since such time, there are other metrics that suggest PH is an unsuitable investment for me at this juncture.
  • PH’s business is cyclical but management has taken steps to reduce cyclicality through the 2017 acquisition of CLARCOR.
  • I view PH as being currently overvalued and a pullback in its stock price should not come as unexpected. In addition, dividend growth is unlikely to be as robust as in 2007 – 2015 (excluding 2010).

Introduction

Investors seeking a steadily increasing source of income often blindly turn to lists of companies that have a lengthy dividend track record. One such list is that of Dividend Kings; these are companies which have increased their dividend at least 50 consecutive years.

One member of this exclusive group of companies is Parker-Hannifin (NYSE: PH). PH may not be a name with which some investors are familiar but when it comes to a dividend track record of annual dividend increases, PH has paid quarterly dividends to shareholders for the past 68 consecutive years and has raised its dividend for 61 consecutive years.

Business Analysis

PH is a leading worldwide diversified manufacturer of motion and control technologies and systems, providing precision engineered solutions for a wide variety of mobile, industrial and aerospace markets.

It manufactures, services, sells, and distributes are wide variety of industrial related products through two reporting segments: Diversified Industrial (81% of 2017 Net Sales) and Aerospace Systems (19% of Net Sales).

Operations are located in 41 states within the United States and in 49 other countries. Products are supplied to approximately 439,000 customers in virtually every significant manufacturing, transportation and processing industry. No single customer accounted for more than 3% of PH’s total net sales for the year ended June 30, 2017.

Please click here to read my Parker-Hannifin stock analysis.

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By |April 17th, 2018|General Investing|Comments Off on Parker-Hannifin Stock Analysis

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