Parker Hannifin Corp PH

Parker Hannifin's Portfolio Looks Strong Amid Robust Aerospace Growth and Healthy Backlogs

Parker Hannifin is 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 industrial production and margin expansion on the heels of its newest Win Strategy and large acquisitions of Clarcor, Lord, Exotic Metals, and Meggitt. We believe part of Parker’s strength lies in its broad range of motion and control technologies with a wide variety of applications, including hydraulics and pneumatics, fluid and gas handling, and sealing. Parker says about 85% of the revenue from these technologies has intellectual property protection, which we believe helps cement its competitive position, given the long product lifecycles and low reinvestment needs of this business. Parker's acquisitions brought in technologies that filled major gaps in its existing portfolio, including in filtration, engineered materials, and vibration technologies. With these acquisitions, the firm gains an even stronger foothold in the highly attractive higher-margin aftermarket and doubles down on long-cycle businesses.