Parker-Hannifin Acquires HDA - Analyst Blog

Parker-Hannifin Corporation (PH) has acquired a Brazilian manufacturer of hydraulic filters and accessories, HDA Acessorios e Equipamentos Ltd. The hydraulic filters and accessories made by HDA are used by the companies operating in mobile equipment, industrial and agriculture markets and having offices and manufacturing location in Sao Paulo.

Revenue from the acquired HDA business will report in Parker's Industrial segment and the business will be added to Parker Latin America Group. HDA annual sales are approximately $10 million, generated through a workforce of about 88 employees.

The acquisition strengthens Parker's hydraulic filtration business in Latin America, thus spreading its existence in this market. HDA's trusted expertise in the business and broad portfolio of product offering provides leverage to Parker.

Parker Hannifin is a high-quality company that is showing good execution through its cost-saving efforts. Although PH stands to benefit from any recovery in global manufacturing activity, the company's increased scale in its international business (where Europe represents by far the largest geography) as well as its meaningful aerospace presence increases its late-cycle exposure relative to past economic cycles.

The company's domestic and foreign operations are subject to significant competitive pressures. To compete successfully, the company's Industrial Segment and Climate & Industrial Controls Segment must excel in terms of product quality and innovation, customer service, manufacturing and distribution capability and price competitiveness.

Meanwhile, the Aerospace Segment must excel on the basis of technological and engineering capability, quality, delivery and service, and price competitiveness. Major competitors of Parker are Eaton Corporation (ETN) and Honeywell International Inc. (HON)

Parker-Hannifin Corporation is a leading worldwide full-line diversified manufacturer of motion and control technologies and systems, including fluid power systems, electromechanical controls and related components. In addition to motion and control products, the company is also a leading worldwide producer of fluid purification, fluid and fuel control, process instrumentation, air conditioning, refrigeration, electromagnetic shielding and thermal management products and systems.

We continue to maintain a Neutral rating on Parker-Hannifin for the long term. The company has a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

 
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