Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 13 May, 25 | PH | Buy | USD 668.76 | USD 703.0 | USD 743.0 | 48 days | Closed |
5.42%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Parker-Hannifin Corporation manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial segment offers sealing, shielding, thermal products and systems, adhesives, coatings, and noise vibration and harshness solutions; filters, systems, and diagnostics solutions to ensure purity and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors used in fluid and gas handling; and hydraulic, pneumatic, and electromechanical components and systems for builders and users of mobile and industrial machinery and equipment. This segment sells its products to original equipment manufacturers (OEMs) and distributors who serve the replacement markets in manufacturing, packaging, processing, transportation, construction, refrigeration and air conditioning, agricultural, and military machinery and equipment industries. The Aerospace Systems segment offers products for use in commercial and military airframe and engine programs, such as control actuation systems and components, engine build-up ducting, engine exhaust nozzles and assemblies, engine systems and components, fluid conveyance systems and components, fuel systems and components, fuel tank inerting systems, hydraulic systems and components, lubrication components, avionics, sensors, pneumatic control components, thermal management products, fire detection and suppression systems and components, and wheels and brakes, as well as fluid metering, delivery, and atomization devices. This segment markets its products directly to OEMs and end users. The company markets its products through direct-sales employees, independent distributors, and sales representatives. Parker-Hannifin Corporation was founded in 1917 and is headquartered in Cleveland, Ohio.
Strong Margin Expansion: The company achieved a record adjusted segment operating margin of 26.3%, an increase of 160 basis points from the prior year
Earnings Growth: Adjusted EPS increased by 7% year-over-year to $6.94, and GAAP EPS grew 33% to $7.37
Overall Sales Growth Flat: Company-wide organic sales growth was only 1% for the quarter, and total sales growth guidance for FY25 is negative 1%
Revenue Decline in Key Segment: Sales in the North American Diversified Industrial segment declined 9% year-over-year, with a 3.5% organic decrease
The company faces investment risk from macroeconomic uncertainties and geopolitical developments—such as tariffs—which may pressure sales and margins despite mitigation efforts
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 668.76 | 615.0 | 703.0 | 743.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Strong Financial Performance in Q3 Fiscal 2025
In the third quarter of fiscal 2025, the company reported sales of $5.0 billion, reflecting an organic sales growth of 1%. Net income rose to $961 million, marking a 32% year-over-year increase. On an adjusted basis, net income was $904 million, up 6%. Diluted earnings per share (EPS) reached $7.37, an increase of 33%, while adjusted EPS came in at $6.94, representing a 7% improvement. The company achieved a segment operating margin of 23.2%, up 170 basis points (bps), and an adjusted segment operating margin of 26.3%, up 160 bps. Year-to-date cash flow from operations increased by 8% to $2.3 billion, representing 15.8% of sales. During the quarter, $650 million worth of shares were repurchased.
CEO’s Statement Reflects Confidence and Strategic Focus
Chairman and CEO Jenny Parmentier highlighted the company’s ability to deliver record results through a combination of disciplined execution and strategic agility. She noted that all reported business segments experienced significant margin expansion, contributing to a record-high adjusted segment operating margin above 26%. The company also achieved record earnings per share and operational cash flow, and executed share repurchases totaling $650 million. Parmentier reaffirmed the commitment to shareholder value through continued capital deployment, including acquisitions and increased repurchase activity, as well as a recently announced 10% increase in the quarterly dividend.
Updated Fiscal 2025 Outlook
The company updated its guidance for the fiscal year ending June 30, 2025. It now anticipates a slight sales decline of approximately 1%, reflecting organic sales growth of 1%, offset by a 1.5% impact from divestitures and a 0.5% unfavorable currency effect. The total segment operating margin is expected to be approximately 22.7%, or 25.9% on an adjusted basis. Full-year EPS is forecast to range from $25.92 to $26.12, or $26.60 to $26.80 on an adjusted basis. These projections include the anticipated effect of recently announced tariffs, which management expects to fully mitigate through internal actions.
Segment Performance: Diversified Industrial – North America
The North American businesses within the Diversified Industrial segment posted sales of $2.03 billion, down 9% from the prior year, with a 3.5% organic sales decline. Despite this, segment operating margin improved by 100 bps to 23.0%, and adjusted segment operating margin rose by 110 bps to 25.2%. Segment operating income declined by 4.8%, as did adjusted segment operating income. The business faced ongoing softness in transportation, off-highway, and energy markets. However, order trends remained positive for the second consecutive quarter.
Segment Performance: Diversified Industrial – International
Sales in the International businesses declined by 5.3% to $1.36 billion, reflecting a 2.8% organic sales decline. Despite lower sales, segment operating income grew 0.7%, and adjusted segment operating income rose 1.2%. Operating margin improved by 140 bps to 23.0%, and adjusted margin increased 160 bps to 25.1%. Regionally, organic growth was strongest in Latin America (8%) and Asia-Pacific (2%), while Europe, Middle East, and Africa (EMEA) saw a 7% decline. Orders strengthened due to robust demand in long-cycle product categories.
Segment Performance: Aerospace Systems and Order Momentum
The Aerospace Systems segment delivered strong performance, with sales increasing 11.6% year-over-year to $1.57 billion, supported by 11.7% organic growth. Segment operating income increased by 28.9%, and adjusted operating income rose by 19.8%. Operating margin improved by 320 bps to 23.7%, and adjusted operating margin reached a record 28.7%, up 200 bps. The segment benefited from strong aftermarket demand and reported a record backlog of $7.3 billion. Order rates rose across all segments, with the Aerospace Systems segment showing a 14% increase, International businesses up 11%, North America up 3%, and overall company orders up 9%.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Parker-Hannifin Corporation (NYSE: PH) at the closing market price of USD 668.76, as on May 12, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Specialty Industrial Machinery
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| PH Parker-Hannifin Corporation |
7.69 1.08% | 719.15 | 25.38 | 19.30 | 2.93 | 5.46 | 3.53 | 15.47 |
| SIEGY Siemens AG ADR |
0.20 0.15% | 129.80 | 17.07 | 15.75 | 1.88 | 2.76 | 2.37 | 11.38 |
| SMAWF Siemens AG Class N |
4.53 1.75% | 263.82 | 16.98 | 15.53 | 1.83 | 2.72 | 2.35 | 11.32 |
| GE GE Aerospace |
2.13 0.87% | 246.88 | 12.87 | 26.60 | 1.61 | 4.69 | 1.61 | 8.43 |
| SBGSY Schneider Electric SA |
0.03 0.06% | 52.77 | 25.90 | 20.92 | 3.12 | 3.98 | 3.50 | 17.37 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 12,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
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