Parker-Hannifin Corporation PH stands to benefit from strength across its businesses, strategic acquisitions and focus on operational excellence. The company remains focused on investing in growth opportunities and solidifying its long-term market position.

PH, which has a market capitalization of $80.3 billion, currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the firm for a while now.

End-Market Strength: Parker-Hannifin’s Aerospace Systems segment has been benefiting from strong momentum in its commercial and military end markets across both OEM and aftermarket channels. The segment is witnessing strong demand for its products and aftermarket support services in the general aviation market, driven by growth in air transport activities. Management expects the Aerospace Systems segment’s organic sales to increase 7-10% from the year-ago level in fiscal 2025 (ending June 2025).

Acquisition Benefits: The company remains open on acquiring businesses to gain access to new customers, regions and product lines. In September 2022, PH acquired Meggitt plc, a global leader in motion and control technologies. The acquisition expanded Parker-Hannifin’s presence in the UK, positioning it well to provide a broader suite of solutions for aircraft, and aero-engine components and systems. It is worth noting that acquisitions boosted the company's sales by 2.6% in fiscal 2024 (ended June 2024).

Secular Growth Trends: PH has doubled its portfolio of aerospace, filtration and engineered materials in the past eight years. Also, it is strategically shifting toward longer-cycle products (to attain stable and predictable revenue streams) supported by secular growth trends, which is improving its revenue mix. The growth drivers, i.e., the Win strategy, CapEx reinvestment (strategy of reinvesting capital expenditures into a company's operations, assets and growth initiatives), acquisitions and secular growth trends are likely to help Parker-Hannifin achieve 4-6% revenue growth by fiscal 2029. 

The company also expects earnings per share to witness a CAGR of more than 10% and is set to achieve a 27% adjusted segment operating margin by fiscal 2029. It is worth noting that Parker-Hannifin reported an adjusted segment operating margin of 24.9% in fiscal 2024, up 200 bps from the year-ago reported number.

YTD Price Performance of PH

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Year to date, the company’s shares have surged 35.4%, higher than the industry’s 10.4% growth.

Shareholder-Friendly Policies: Parker-Hannifin remains committed to increasing shareholders’ value through dividend payments. For instance, in fiscal 2024, Parker-Hannifin paid out cash dividends of $782 million, reflecting an increase of 11.1% year over year. Also, in April 2024, the company hiked its quarterly dividend by 10% to $1.63 per share.

Other Stocks to Consider

Some other top-ranked companies from the same space are discussed below.

Flowserve Corporation FLS currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FLS delivered a trailing four-quarter average earnings surprise of 18.2%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2024 earnings has increased 3.8%.

Crane Company CR presently has a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.

In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.

RBC Bearings RBC currently carries a Zacks Rank of 2. RBC delivered a trailing four-quarter average earnings surprise of 4.8%.

In the past 60 days, the consensus estimate for RBC Bearings’ fiscal 2025 earnings has increased 0.7%.

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