Morningstar

Morningstar, Inc.

Equity Bottom-Up

We think of Parker as a well-run, diversified industrial conglomerate with exposure to a wide variety of end markets. Over time, we believe the firm can achieve its goals of outpacing the industrial production index by 150 basis points and margin expansion on the heels of both its Win Strategy and recent acquisitions (Clarcor and Lorde). The current Win Strategy was borne out of CEO Tom Williams' and COO Lee Banks’ longtime experience both managing and operating Parker’s various businesses. In…

Nothing in Parker Hannifin’s latest fiscal 2019 third-quarter results alters our long-term view of the firm. The company had a solid quarter and maintained its full-year 2019 guidance. Our assumptions for 2019 top-line organic growth are in line with management’s expectations. As a result, we maintain our $183 fair value estimate for the stock, which we updated after its recently announced acquisition of Lord the week of April 29, 2019. We also retain our narrow moat, stable trend, Standard…

Parker announced it is acquiring Lord Corporation, which brings Parker an attractive portfolio of adhesives, as well as specialty materials and vibration control technologies. Parker will fold this acquisition in with the rest of its engineered materials group, under its diversified industrial segment. After evaluating the deal, we lift our fair value to $183 per share from $178 previously, which reflects our view the deal is value-accretive. While not optically cheap at an EV/adjusted EBITDA of…

After taking a fresh look at Parker Hannifin, we are lowering our moat trend rating to stable. We had previously thought industrial Internet of Things offerings like the Parker Tracking Systems, as well as an expanding distribution network in markets outside of North America, could lead to stronger switching costs. We no longer find the first argument persuasive given that Parker is backing away from making Internet of Things an additional revenue source. As for the expanding distribution…

United States

Parker-Hannifin Corporation manufactures motion control products, including fluid power systems, electromechanical controls, and related components.  The Company also produces fluid purification, fluid flow, process instrumentation, air conditioning, refrigeration, and electromagnetic shielding and thermal management products.

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