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Watch Out: Barbarians At The Gate For Parker Hannifin Corporation (PH)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Parker Hannifin Corporation (PH) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Parker Hannifin Corporation as such a stock due to the following factors:

  • PH has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $168.5 million.
  • PH has traded 560,574 shares today.
  • PH traded in a range 240.7% of the normal price range with a price range of $5.68.
  • PH traded above its daily resistance level (quality: 531 days, meaning that the stock is crossing a resistance level set by the last 531 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on PH:

Parker-Hannifin Corporation manufactures motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The stock currently has a dividend yield of 1.7%. PH has a PE ratio of 17.4. Currently there are 7 analysts that rate Parker Hannifin Corporation a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Parker Hannifin Corporation has been 890,700 shares per day over the past 30 days. Parker Hannifin has a market cap of $16.2 billion and is part of the industrial goods sector and industrial industry. The stock has a beta of 1.63 and a short float of 4.1% with 3.67 days to cover. Shares are up 27.8% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Parker Hannifin Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 17.6%. Since the same quarter one year prior, revenues slightly increased by 0.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
  • Compared to its closing price of one year ago, PH's share price has jumped by 27.00%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PARKER-HANNIFIN CORP's earnings per share declined by 9.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PARKER-HANNIFIN CORP reported lower earnings of $6.22 versus $7.44 in the prior year. This year, the market expects an improvement in earnings ($6.46 versus $6.22).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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