Parker-Hannifin Corporation (PH) Could Become One of Buffett’s Favorites (Part 5)

Peer comparison

At the current trading price of around $98 per share, Parker-Hannifin is worth nearly $14.6 billion. The market is valuing the company at 8.52 times EV/EBITDA. Compared to its peers, including Emerson Electric Co. (NYSE:EMR) and Honeywell International Inc. (NYSE:HON), Parker-Hannifin Corporation (NYSE:PH) is the smallest company.

Emerson is trading at around $57 per share, with a total market cap of $41 billion. Emerson is a bit more expensive than Parker-Hannifin at 8.8 times EV/EBITDA. Honeywell is the biggest company among the three, with nearly $58 billion in total market cap. At the current trading price of around $74 per share, Honeywell has the most expensive valuation at 11.25 times EV/EBITDA.

Among the three, Emerson is the most profitable, with 17% operating margin, while the operating margins of Parker-Hannifin and Honeywell were 12% and 11%, respectively. Among the three, Parker-Hannifin Corporation (NYSE:PH) is paying the lowest dividend with a yield of 1.8%. Emerson offers shareholders the highest dividend yield at 2.9%, while Honeywell’s dividend yield is 2.2%.

Foolish bottom line

Parker-Hannifin seems to be a decent stock for long-term investors. Among the three, I would prefer Emerson due to its highest operating margin, highest dividend yield, and reasonable valuation. However, investors need to dig deeper into Emerson’s business model to determine whether or not Emerson is suitable for their portfolios.

The article This Company Could Become One of Buffett’s Favorites (Part 5) originally appeared on Fool.com and is written by Anh Hoang.

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