Analyzing Komatsu (OTCMKTS:KMTUY) and Parker-Hannifin (NYSE:PH)

Parker-Hannifin (NYSE:PH) and Komatsu (OTCMKTS:KMTUY) are both large-cap industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Parker-Hannifin and Komatsu, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Parker-Hannifin	0	2	17	0	2.89
Komatsu	0	1	0	0	2.00

Parker-Hannifin presently has a consensus price target of $1,114.55, suggesting a potential upside of 14.64%. Given Parker-Hannifin’s stronger consensus rating and higher possible upside, research analysts plainly believe Parker-Hannifin is more favorable than Komatsu.

Earnings and Valuation

This table compares Parker-Hannifin and Komatsu”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Parker-Hannifin	$21.50 billion	5.70	$3.65 billion	$28.49	34.12
Komatsu	$27.45 billion	1.51	$2.48 billion	$2.73	16.34

Parker-Hannifin has higher earnings, but lower revenue than Komatsu. Komatsu is trading at a lower price-to-earnings ratio than Parker-Hannifin, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Parker-Hannifin has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Komatsu has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Insider & Institutional Ownership

82.4% of Parker-Hannifin shares are held by institutional investors. Comparatively, 0.2% of Komatsu shares are held by institutional investors. 0.3% of Parker-Hannifin shares are held by insiders. Comparatively, 2.9% of Komatsu shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Parker-Hannifin and Komatsu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Parker-Hannifin	16.97%	28.48%	13.49%
Komatsu	8.93%	10.51%	5.93%

Dividends

Parker-Hannifin pays an annual dividend of $8.00 per share and has a dividend yield of 0.8%. Komatsu pays an annual dividend of $0.89 per share and has a dividend yield of 2.0%. Parker-Hannifin pays out 28.1% of its earnings in the form of a dividend. Komatsu pays out 32.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Parker-Hannifin has increased its dividend for 70 consecutive years.

Summary

Parker-Hannifin beats Komatsu on 14 of the 17 factors compared between the two stocks.

About Parker-Hannifin

Parker-Hannifin Corporation manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial segment offers sealing, shielding, thermal products and systems, adhesives, coatings, and noise vibration and harshness solutions; filters, systems, and diagnostics solutions to ensure purity and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors used in fluid and gas handling; and hydraulic, pneumatic, and electromechanical components and systems for builders and users of mobile and industrial machinery and equipment. This segment sells its products to original equipment manufacturers (OEMs) and distributors who serve the replacement markets in manufacturing, packaging, processing, transportation, construction, refrigeration and air conditioning, agricultural, and military machinery and equipment industries. The Aerospace Systems segment offers products for use in commercial and military airframe and engine programs, such as control actuation systems and components, engine build-up ducting, engine exhaust nozzles and assemblies, engine systems and components, fluid conveyance systems and components, fuel systems and components, fuel tank inerting systems, hydraulic systems and components, lubrication components, avionics, sensors, pneumatic control components, thermal management products, fire detection and suppression systems and components, and wheels and brakes, as well as fluid metering, delivery, and atomization devices. This segment markets its products directly to OEMs and end users. The company markets its products through direct-sales employees, independent distributors, and sales representatives. Parker-Hannifin Corporation was founded in 1917 and is headquartered in Cleveland, Ohio.

About Komatsu

Komatsu Ltd. manufactures and sells construction, mining, and utility equipment in Japan, the Americas, Europe, China, Rest of Asia, Oceania, the Middle East, Africa, and CIS countries. It operates through three segments: Construction, Mining and Utility Equipment; Retail Finance; and Industrial Machinery and Others. The company offers construction and mining equipment, including excavators, wheel loaders, bulldozers, motor graders, dump truck, rope and hybrid shovels, electric wheel loaders, continuous miners, and jumbo drills. It also provides forestry equipment, including harvesters, forwarders, feller bunchers, excavators, mini excavators, and forklifts; demolition, waste, and recycling equipment, such as mobile crushers, hydraulic excavators, wheel loaders, and mini shovels; material handling equipment; and tunnel-boring machines, pipe layers, towing tractors, and engines. In addition, the company offers industrial machinery, including presses, sheet-metal machinery, 3D laser cutting machine, transfer machines, battery manufacturing equipment, wire saws, thermos modules, thermoelectric generation module, and temperature control products; quarry equipment; agricultural and livestock equipment; EH sensor device; iron and steel casting products; and logistics equipment. Further, the company provides retail financing; construction machinery rental services; remanufactured products; other support services; transportation, warehousing, packing, and other services; and purchases and sells used equipment. Komatsu Ltd. was founded in 1884 and is headquartered in Tokyo, Japan.