CLEVELAND - Parker Hannifin Corporation (NYSE: NYSE:PH), a leader in motion and control technologies, has entered into an agreement to sell its North America Composites and Fuel Containment (CFC) Division to SK Capital Partners. This move is part of a broader strategy by Parker to divest selected businesses, with the CFC Division being the latest in a series of divestitures by the company over the past three years, amounting to nearly $450 million in annual sales.
The CFC Division, which generates about $350 million in annual sales, is based in Erlanger, Kentucky and operates across five additional locations in the United States and Mexico. The division specializes in manufacturing composites, fuel tanks, and bladders.
Jenny Parmentier, Chairman and Chief Executive Officer of Parker, commented on the divestiture, stating that it is a strategic assessment to determine if Parker is the best owner for certain businesses or if they could thrive more as part of another organization. Parmentier acknowledged the strong performance and growth potential of the CFC Division and expressed best wishes to the team for their future under the new ownership.
Parker's divestiture strategy has included the sale of several other divisions and product lines, such as the France Electromechanical Solutions Division and the Indego® exoskeleton product line, among others.
Lazard (NYSE:LAZ) served as the exclusive financial advisor to Parker, while Jones Day provided legal counsel for the transaction. The completion of the sale is subject to customary closing conditions.
The divestiture is in line with Parker's ongoing efforts to streamline its operations and focus on areas where it can leverage its strengths. The company has a long history of enabling engineering breakthroughs and aims to continue this legacy into the future.
This news is based on a press release statement from Parker Hannifin Corporation.
In other recent news, Parker Hannifin Corporation has announced the appointment of E. Jean Savage to its Board of Directors. Savage, with her extensive experience in the industrial sector, is expected to contribute significantly to the company's strategic direction. In addition, Parker Hannifin has set ambitious financial targets for fiscal year 2029, including a 4-6% compound annual growth rate in organic sales and significant margin expansions. These projections are backed by expected earnings per share of $24.80 in FY1, $26.41 in FY2, and potentially over $40 in EPS by FY29. Analysts from KeyBanc Capital Markets and Goldman Sachs (NYSE:GS) have expressed confidence in the company's outlook, assigning Overweight and Conviction Buy ratings respectively. Furthermore, Goldman Sachs has increased its price target on the company's shares, emphasizing Parker Hannifin's alignment with several secular growth trends and its financial strength. These are recent developments and investors are advised to keep abreast of the situation.
InvestingPro Insights
As Parker Hannifin Corporation (NYSE: PH) navigates through its strategic divestitures, the company's financial health and market standing offer key insights. With a market capitalization of $70.89 billion, Parker Hannifin stands as a prominent player in the machinery industry. This is supported by the company's ability to maintain a consistent dividend, having increased it for the past seven years and maintained payments for an impressive 54 consecutive years. These dividends reflect the company's commitment to shareholder returns and financial stability.
InvestingPro data highlights Parker Hannifin's robust financial performance over the last twelve months leading up to Q3 2024. The company has achieved a revenue growth of 9.26%, with a gross profit margin of 36.49%. These figures underscore the company's efficiency and its ability to generate income from its sales. Moreover, Parker Hannifin's operating income margin stands at 20.95%, indicating strong profitability relative to its operations.
InvestingPro Tips suggest that Parker Hannifin is trading at a low P/E ratio relative to near-term earnings growth, with a P/E ratio of 25.56 and an adjusted P/E ratio for the last twelve months as of Q3 2024 at 23.42. This could indicate that the company's stock is potentially undervalued given its earnings prospects. Additionally, analysts have revised their earnings estimates upwards for the upcoming period, reflecting optimism about the company's future performance.
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