Parker-Hannifin Stock: Is PH Outperforming the Industrial Sector?

Cleveland, Ohio-based Parker-Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems. Valued at $121.6 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 12.3% from its 52-week high of $1,099.94, achieved on Aug. 6. Over the past three months, PH stock gained 13.4%, outperforming the State Street Industrial Select Sector SPDR ETF’s (XLI) marginal losses during the same time frame.

Shares of PH rose 9.7% on a YTD basis, underperforming XLI’s YTD gains of 12.6%. However, the stock climbed 28.9% over the past 52 weeks, outperforming XLI’s 15.3% returns over the last year.

To confirm the bullish trend, PH has been trading above its 200-day moving average over the past year, with slight fluctuations. However, the stock has been trading below its 50-day moving average recently. 

Parker-Hannifin’s outperformance was driven by strong organic growth across aerospace, which posted its fourth straight year of double-digit gains, and broad industrial markets, infrastructure and HVAC demand. Record margins and backlog, plus nearly $15 billion in capital actions including Curtis Instruments and pending deals for Filtration Group and CIRCOR’s A&D business, support its shift to longer-cycle verticals now nearly 65% of sales, with management guiding to continued margin expansion and high-single-digit aerospace growth.

PH’s rival, Xylem Inc. (XYL) shares lagged behind the stock, with a 24% loss over the past 52 weeks and a 20.8% downtick on a YTD basis. 

Wall Street analysts are bullish on PH’s prospects. The stock has a consensus “Strong Buy” rating from the 25 analysts covering it, and the mean price target of $1,175.38 suggests a potential upside of 21.9% 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.