Parker Hannifin (PH:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Parker Hannifin(PH:NYS)

Industrials:Diversified Industrials

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$164.10 (USD) 05/11/2018

Weighted Valuation
$176.43 (USD)

Overall Rating
Undervalued by 7.5%

Valuation Models Analyst Consensus: $190.00 (USD)
(in order of importance) Discounted Cash Flow: $158.84 (USD)
Comparables: $170.93 (USD)
Valuation Methods This company is:
Cash Flow: Fairly valued on a Cash Flow Valuation
Comparable Company: Fairly valued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (PH:NYS USD)

Price 164.10
Range 161.17 – 165.03
52 week 145.22 – 210.94
Open 162.25
Vol / Avg. 1.66M/1.58M
Mkt cap 21.73B
P/E 20.96
Div/yield 2.74/0.02
EPS 7.83
Shares 132.42M
Beta 1.52

Company Description

Parker Hannifin is an industrial manufacturing firm that provides motion and control components and systems. It operates in two business segments: aerospace and diversified industrials (North America and international). The core industrial segments have key product categories ranging from hydraulics, fluid connectors, filtration, and automation, while the aerospace segment offers flight control systems and components. The company also sells its products through about 3,000 branded ParkerStores worldwide.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for PH:NYS

Using a discounted cash flow model we generated an intrinsic value of $158.84 (USD) for PH:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

PH:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $158.84 1% 5% 1% 5%
WACC (or Ke) 10.27 $188.29 $136.51
Terminal Growth Rate 3.00 $139.34 $184.56
Tax Rate 0.38 $173.52 $144.16
Cash Flow 3,099,373,000 $149.74 $167.94
Capital Expenditures 23,236,800 $158.91 $158.77
Long Term Debt 3,248,964,000 $160.07 $157.61

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $170.93 (USD) for PH:NYS. We also generated a valuation of $171.42 (USD) using other metrics and comparables.
The comparable companies were Arconic (ARNC:NYS), Dover (DOV:NYS), Flowserve (FLS:NYS), Lennox International (LII:NYS) and Roper Technologies (ROP:NYS).

Company PH:NYS End Date Value
Earnings/Share $7.83 (USD)
Book Value/Share $44.25 (USD)
Sales/Share $105.61 (USD)
Cash Flow/Share $11.82 (USD)
EBITDA/Share $17.59 (USD)
Price Based on Comps Adjustment Factor (%)
$183.55 (USD) -28.4
$155.18 (USD) -27.4
$256.95 (USD) -18.9
$207.61 (USD) -26.1
$285.71 (USD) -10.9
PH:NYS Ratios Used Average Values ARNC:NYS DOV:NYS FLS:NYS LII:NYS ROP:NYS
19.37 PE Ratio 23.44 0.00 16.34 0.00 26.63 27.36
3.43 PB Ratio 3.51 1.91 4.41 3.70 0.00 4.00
1.44 PS Ratio 2.43 0.71 1.61 1.58 2.23 6.03
12.83 PCF Ratio 20.67 12.69 17.21 29.01 20.53 23.89
10.15 EV to EBITDA 16.24 13.71 10.67 19.10 17.04 20.70

Multiples

Using a multiples approach we generated a valuation of  $169.86 (USD) for PH:NYS

Company PH:NYS End Date Value
Earnings/Share $7.83 (USD)
Book Value/Share $44.25 (USD)
Sales/Share $105.61 (USD)
Cash Flow/Share $11.82 (USD)
EBITDA/Share $17.59 (USD)
Price Based on Comps Adjustment Factor
$166.85 (USD) 0
$153.86 (USD) 0
$160.46 (USD) 0
$171.75 (USD) 0
$196.37 (USD) 0
Ratios Ratio Average
PE Ratio 21.31
PB Ratio 3.48
PS Ratio 1.52
PCF Ratio 14.53
EV to EBITDA 11.16

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  PH:NYS for the last 10 years was  3.38

We ran the Adjusted Book Value for  PH:NYS and generated a book value of  $44.25 (USD)
By multiplying these we get an adjusted valuation of  $149.69 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for PH:NYS. The 3 analysts have a concensus valuation for PH:NYS for 2019 of $190.00 (USD).

PH:NYS Parker Hannifin

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 5 0 3.3333 Hold 2018-11-2

Current Price: 164.1 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 11.14 11.91 12.50
# EPS Analysts 4 4 1
Mean Revenue 14,597.00 15,014.60 15,481.30
# Revenue Analysts 3 3 1
Mean Target Price 190.00
Mean Cash Flow 14.63 16.13 12.79
Mean EBITDA 2,619.20 2,747.50 3,009.10
Mean Net Income 1,512.20 1,585.20 1,688.10
Mean Debt Outstanding 2,906.80 1,559.30 1,209.10
Mean Tax Rate 23.50 23.50
Mean Growth Rate 8.46
Mean Capital Expenditure 285.60 302.40 309.60

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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