Will Parker Hannifin continue to plunge in March?

Macroaxis Story

As the saying goes, "volatility breeds opportunity," and Parker Hannifin, a leading player in the Specialty Industrial Machinery sector, seems to be living up to this adage. With the fiscal year ending in June, the company has seen a significant swing in its stock value, with a daily balance of power at -1.19, indicating a potential for a rebound. Despite a day typical price of $467.36, analysts have set a higher target price estimated value at $470.62, suggesting room for growth. The accumulation distribution stands at 40.1K, hinting at a possible shift in momentum. With 11 strong buy recommendations against just one strong sell, the overall consensus leans towards a buy, sparking speculation that Parker Hannifin could be poised for a rebound in March. Considering a 60-day total investment horizon, Parker Hannifin is projected to generate a return on investment that is 1.87 times higher than the market. However, it's important to note that the company is also 1.87 times more volatile than its market benchmark. It trades approximately 0.3 of its potential returns per unit of risk. Currently, the Dow Jones Industrial Average is generating about 0.42 per unit of risk. While some traders who have a high tolerance for risk may be indifferent to the current market volatility, it's prudent to assess the risk associated with investing in Parker Hannifin. In the following discussion, we will explore the likelihood of Parker Hannifin generating above-average margins in the next month.

Published over two months ago

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Reviewed by Michael Smolkin

Parker Hannifin reports approximately $475.18 million in cash, with $2.98 billion of positive cash flow from operations. This results in a cash-per-share (CPS) ratio of 4.39.

Important Highlights

Parker Hannifin's stock has shown a significant level of volatility, as indicated by its standard deviation of 1.45, which may deter some risk-averse investors. However, the company's Jensen Alpha of 0.0596 suggests that it has been generating a higher return than expected given its level of risk, which could make it an attractive investment for those willing to tolerate some volatility. Furthermore, the company's accumulation distribution of 40.1K indicates that it has been experiencing a net inflow of money, which could signal a potential rebound in the near future.

Will Parker Hannifin continue to plunge in March?

Volatility is a rate at which the price of Parker Hannifin or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Parker Hannifin may increase or decrease. In other words, similar to Parker's beta indicator, it measures the risk of Parker Hannifin and helps estimate the fluctuations that may happen in a short period of time. So if prices of Parker Hannifin fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is Parker Hannifin's Liquidity

Parker Hannifin financial leverage refers to using borrowed capital as a funding source to finance Parker Hannifin ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Parker Hannifin financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Parker Hannifin's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Parker Hannifin's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Parker Hannifin's total debt and its cash.

Parker Hannifin Gross Profit

Parker Hannifin Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Parker Hannifin previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Parker Hannifin Gross Profit growth over the last 10 years. Please check Parker Hannifin's gross profit and other fundamental indicators for more details.

Parker Hannifin Volatility Drivers

Parker Hannifin unsystematic risk is unique to Parker Hannifin and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Parker Hannifin you can also buy Emerson Electric. You can also mitigate this risk by investing in the industrials sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Parker Hannifin important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Parker Hannifin income statement and balance sheet. Here are more details about Parker volatility.

	Total Assets	Net Debt	Total Liab	Common Stock	Good Will	Capital Stock	Total Revenue	Gross Profit	Net Income	Tax Provision	Ptb Ratio	Pb Ratio	Ev To Sales	Payout Ratio	Pfcf Ratio	Pe Ratio	Current Ratio	Graham Number	Ebt Per Ebit	Quick Ratio	Cash Ratio	Debt Ratio	Market Cap
Total Assets		0.96	0.99	0.57	0.98	-0.69	0.94	0.97	0.95	0.41	0.83	0.83	0.89	0.42	0.61	0.82	-0.68	0.95	0.74	-0.55	-0.4	0.44	0.95
Net Debt	0.96		0.98	0.39	0.97	-0.66	0.81	0.9	0.85	0.36	0.79	0.79	0.89	0.57	0.41	0.84	-0.69	0.87	0.7	-0.69	-0.57	0.54	0.91
Total Liab	0.99	0.98		0.54	0.98	-0.68	0.91	0.96	0.93	0.38	0.83	0.83	0.89	0.47	0.58	0.82	-0.67	0.93	0.72	-0.56	-0.41	0.49	0.93
Common Stock	0.57	0.39	0.54		0.49	-0.15	0.75	0.58	0.6	0.25	0.56	0.56	0.44	-0.17	0.92	0.47	-0.28	0.63	0.27	0.0	0.17	0.3	0.52
Good Will	0.98	0.97	0.98	0.49		-0.67	0.88	0.94	0.93	0.45	0.87	0.87	0.93	0.41	0.53	0.83	-0.74	0.93	0.71	-0.61	-0.48	0.49	0.95
Capital Stock	-0.69	-0.66	-0.68	-0.15	-0.67		-0.65	-0.74	-0.69	-0.31	-0.41	-0.41	-0.46	-0.55	-0.26	-0.43	0.56	-0.51	-0.67	0.34	0.37	0.17	-0.57
Total Revenue	0.94	0.81	0.91	0.75	0.88	-0.65		0.96	0.95	0.45	0.76	0.76	0.75	0.19	0.79	0.68	-0.63	0.92	0.72	-0.36	-0.2	0.27	0.87
Gross Profit	0.97	0.9	0.96	0.58	0.94	-0.74	0.96		0.97	0.53	0.77	0.77	0.8	0.33	0.61	0.73	-0.71	0.92	0.83	-0.51	-0.37	0.28	0.92
Net Income	0.95	0.85	0.93	0.6	0.93	-0.69	0.95	0.97		0.52	0.82	0.82	0.84	0.21	0.64	0.68	-0.65	0.95	0.77	-0.4	-0.26	0.29	0.94
Tax Provision	0.41	0.36	0.38	0.25	0.45	-0.31	0.45	0.53	0.52		0.37	0.37	0.35	-0.2	0.12	0.37	-0.54	0.45	0.59	-0.38	-0.28	0.06	0.49
Ptb Ratio	0.83	0.79	0.83	0.56	0.87	-0.41	0.76	0.77	0.82	0.37		1.0	0.94	0.26	0.64	0.82	-0.55	0.89	0.55	-0.34	-0.26	0.59	0.91
Pb Ratio	0.83	0.79	0.83	0.56	0.87	-0.41	0.76	0.77	0.82	0.37	1.0		0.94	0.26	0.64	0.82	-0.55	0.89	0.55	-0.34	-0.26	0.59	0.91
Ev To Sales	0.89	0.89	0.89	0.44	0.93	-0.46	0.75	0.8	0.84	0.35	0.94	0.94		0.38	0.5	0.89	-0.61	0.92	0.59	-0.56	-0.46	0.59	0.96
Payout Ratio	0.42	0.57	0.47	-0.17	0.41	-0.55	0.19	0.33	0.21	-0.2	0.26	0.26	0.38		-0.1	0.51	-0.22	0.19	0.31	-0.37	-0.49	0.22	0.31
Pfcf Ratio	0.61	0.41	0.58	0.92	0.53	-0.26	0.79	0.61	0.64	0.12	0.64	0.64	0.5	-0.1		0.45	-0.31	0.68	0.31	0.07	0.19	0.21	0.57
Pe Ratio	0.82	0.84	0.82	0.47	0.83	-0.43	0.68	0.73	0.68	0.37	0.82	0.82	0.89	0.51	0.45		-0.61	0.76	0.55	-0.62	-0.54	0.58	0.84
Current Ratio	-0.68	-0.69	-0.67	-0.28	-0.74	0.56	-0.63	-0.71	-0.65	-0.54	-0.55	-0.55	-0.61	-0.22	-0.31	-0.61		-0.61	-0.77	0.77	0.65	-0.16	-0.68
Graham Number	0.95	0.87	0.93	0.63	0.93	-0.51	0.92	0.92	0.95	0.45	0.89	0.89	0.92	0.19	0.68	0.76	-0.61		0.69	-0.44	-0.27	0.46	0.98
Ebt Per Ebit	0.74	0.7	0.72	0.27	0.71	-0.67	0.72	0.83	0.77	0.59	0.55	0.55	0.59	0.31	0.31	0.55	-0.77	0.69		-0.5	-0.41	0.02	0.75
Quick Ratio	-0.55	-0.69	-0.56	0.0	-0.61	0.34	-0.36	-0.51	-0.4	-0.38	-0.34	-0.34	-0.56	-0.37	0.07	-0.62	0.77	-0.44	-0.5		0.89	-0.35	-0.54
Cash Ratio	-0.4	-0.57	-0.41	0.17	-0.48	0.37	-0.2	-0.37	-0.26	-0.28	-0.26	-0.26	-0.46	-0.49	0.19	-0.54	0.65	-0.27	-0.41	0.89		-0.12	-0.42
Debt Ratio	0.44	0.54	0.49	0.3	0.49	0.17	0.27	0.28	0.29	0.06	0.59	0.59	0.59	0.22	0.21	0.58	-0.16	0.46	0.02	-0.35	-0.12		0.45
Market Cap	0.95	0.91	0.93	0.52	0.95	-0.57	0.87	0.92	0.94	0.49	0.91	0.91	0.96	0.31	0.57	0.84	-0.68	0.98	0.75	-0.54	-0.42	0.45

Click cells to compare fundamentals

What is the case for Parker Hannifin Investors

The recent bullish price patterns experienced by current Parker-Hannifin shareholders may encourage traders to take a closer look at the company as it is trading at a share price of 464.50 on 1,686,283 in trading volume. The company directors and management have been very successful in rebalancing the company assets at opportune times to take advantage of market volatility in December. The stock standard deviation of daily returns for 90 days investing horizon is currently 0.97. The very small Stock volatility is a good signal to traders with longer-term investment horizons. "Buy when there's blood in the streets," goes the old investment adage, and it seems that Parker Hannifin, a key player in the Specialty Industrial Machinery industry, may be poised for a rebound in March. Despite a high volatility reflected in its Beta of 1.5 and a downside deviation of 0.8151, the company's strong fundamentals suggest potential for growth.

With a healthy current ratio of 2.06X and a robust operating margin of 0.19%, Parker Hannifin demonstrates financial stability. The company's net assets stand at a solid 29.96B, backed by a substantial EBITDA of 4.07B. Furthermore, the firm's risk-adjusted performance of 0.1725 and a Treynor Ratio of 0.2618 indicate a good risk-reward balance. However, investors should be mindful of the company's high kurtosis of 20.31, which suggests potential for extreme price swings. In conclusion, while Parker Hannifin's stock may be volatile, its strong financial health could make it a candidate for a rebound in the coming month. .

Will Parker plunge impact its fundamentals?

The recent Semi Variance for Parker Hannifin has escalated to 0.06, suggesting an increase in the risk of volatility in the stock's returns. This heightened risk could potentially trigger another dip in the stock's price. However, it's important to bear in mind that such price swings might influence short-term trading strategies, but they may not necessarily affect the company's intrinsic value. Investors should closely scrutinize Parker Hannifin's financial stability and operational performance to ascertain if any potential price drop would indeed impact its fundamentals. Parker Hannifin exhibits low volatility, as indicated by a Treynor Ratio of 0.26, a Maximum Drawdown of 11.56, and a kurtosis of 20.31. Nevertheless, we advise all investors to conduct further analysis of Parker Hannifin to ensure all market information is disseminated and aligns with the current expectations about Parker Hannifin's upside potential. Understanding different market volatility trends often assists investors in timing the market. The correct application of volatility indicators enables traders to gauge Parker Hannifin's stock risk against market volatility during both bullish and bearish trends.

The elevated level of volatility that accompanies bear markets can directly affect Parker Hannifin's stock price, causing stress for investors as they witness their shares' value decline. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices decrease. In conclusion, Parker Hannifin Corporation, with a market valuation of $464.5 billion, presents a promising investment opportunity. The consensus among 13 analysts is a 'Buy' recommendation, with 11 strong buys, 3 holds, and only 1 strong sell. The analysts' target price estimated value stands at $470.615, which indicates a potential upside from the current market price. Furthermore, the valuation real value of $500.91 surpasses the current market value, further underscoring the potential for capital appreciation. However, investors should also consider the possible downside price of $488.28. As the fiscal year end approaches in June, investors are advised to monitor the stock closely. .

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Editorial Staff

Rifka Kats is a Member of Macroaxis Editorial Board. Rifka writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce. View Profile

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