Critical Comparison: Parker-Hannifin (PH) & SPX (SPXC)

Parker-Hannifin (NYSE: PH) and SPX (NYSE:SPXC) are both industrial products companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and price targets for Parker-Hannifin and SPX, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parker-Hannifin 0 7 13 0 2.65
SPX 0 0 0 0 N/A

Parker-Hannifin presently has a consensus target price of $187.95, indicating a potential upside of 0.87%. Given Parker-Hannifin’s higher probable upside, analysts clearly believe Parker-Hannifin is more favorable than SPX.

Valuation & Earnings

This table compares Parker-Hannifin and SPX’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Parker-Hannifin $12.03 billion 2.06 $983.41 million $7.78 23.95
SPX $1.47 billion 0.91 -$67.20 million ($1.36) -23.09

Parker-Hannifin has higher revenue and earnings than SPX. SPX is trading at a lower price-to-earnings ratio than Parker-Hannifin, indicating that it is currently the more affordable of the two stocks.

Dividends

Parker-Hannifin pays an annual dividend of $2.64 per share and has a dividend yield of 1.4%. SPX does not pay a dividend. Parker-Hannifin pays out 33.9% of its earnings in the form of a dividend.

Institutional and Insider Ownership

78.2% of Parker-Hannifin shares are owned by institutional investors. Comparatively, 87.4% of SPX shares are owned by institutional investors. 1.1% of Parker-Hannifin shares are owned by insiders. Comparatively, 0.6% of SPX shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Parker-Hannifin and SPX’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Parker-Hannifin 8.37% 23.61% 8.13%
SPX -3.86% 37.49% 4.23%

Risk & Volatility

Parker-Hannifin has a beta of 1.4, suggesting that its share price is 40% more volatile than the S&P 500. Comparatively, SPX has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500.

Summary

Parker-Hannifin beats SPX on 11 of the 15 factors compared between the two stocks.

Parker-Hannifin Company Profile

Parker-Hannifin Corporation is a manufacturer of motion and control technologies and systems, providing precision engineered solutions for a range of mobile, industrial and aerospace markets. The Company operates through segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial Segment is an aggregation of several business units, which manufacture motion-control and fluid power system components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. The Diversified Industrial Segment consists of Automation Group, Engineered Materials Group, Filtration Group, Fluid Connectors Group, Hydraulics Group and Instrumentation Group. The Aerospace Systems Segment produces hydraulic, fuel, pneumatic and electro-mechanical systems and components, which are utilized on domestic commercial, military and general aviation aircrafts.

SPX Company Profile

SPX Corporation is a global supplier of infrastructure equipment. The Company operates through three segments: HVAC; Detection and Measurement, and Engineered Solutions. The HVAC solutions offered by its businesses include package cooling towers, residential and commercial boilers, heating and ventilation products. Its detection and measurement product lines encompass underground pipe and cable locators, and inspection equipment. Within its power platform, it is a manufacturer of medium and large power transformers, as well as equipment for various types of power plant, including cooling equipment, heat exchangers and pollution control systems. As of December 31, 2016, the Company had operations in approximately 15 countries.

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