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Parker Hannifin Corp PH

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Economic Moat




Parker Hannifin’s Strong Margin Performance Helps Crush Our Fiscal Q4 Expectations

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

Narrow-moat rated Parker Hannifin had a strong fiscal fourth quarter that easily blew past our expectations thanks to strong margin performance. We plan on lifting our fair value estimate by about a mid-single-digit percentage, though that could change as we look through the 10-K and roll our model for the close of fiscal 2020 (our published fair value estimate currently stands at $178, and time value of money alone adds about $4 to $5 to our fair value). While revenue came in largely as we expected (although diversified industrial international outperformed), the diversified industrial international portion of Parker’s business roared past our expectations on the margin front. That said, our enthusiasm is slightly tempered by a guide that came in modestly below our current expectations for next year.

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Company Profile

Business Description

Parker Hannifin Corp is an industrial conglomerate operating two segments: diversified industrial, which serves a variety of end markets, and aerospace systems, which sells engine and actuation components. The diversified industrial segment consists of six groups, including engineered materials (sealing devices), filtration (filters and systems monitoring and removing contaminants from liquids and gases), fluid connectors (valves, couplings, and other fittings), instrumentation (flow manufacturing components and fluid control applications), and motion systems (hydraulic, pneumatic, and electromechanical components in industrial machinery and equipment). The segment boasts 15,500 independent distributors, and about 40% of its business occurs outside the United States.

6035 Parkland Boulevard
Cleveland, OH, 44124-4141
T +1 216 896-3000
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Jun 30, 2020
Fiscal Year End Jun 30, 2021
Stock Type Cyclical
Employees 50,520