Head-To-Head Comparison: Gates Industrial (NYSE:GTES) & Parker-Hannifin (NYSE:PH)

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Parker-Hannifin and Gates Industrial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Parker-Hannifin	0	5	16	0	2.76
Gates Industrial	0	5	6	0	2.55

Parker-Hannifin presently has a consensus price target of $995.37, suggesting a potential downside of 1.36%. Gates Industrial has a consensus price target of $30.27, suggesting a potential upside of 9.79%. Given Gates Industrial’s higher possible upside, analysts clearly believe Gates Industrial is more favorable than Parker-Hannifin.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Parker-Hannifin	17.29%	27.56%	12.72%
Gates Industrial	7.30%	10.36%	5.27%

Risk and Volatility

Parker-Hannifin has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, Gates Industrial has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

Valuation & Earnings

This table compares Parker-Hannifin and Gates Industrial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Parker-Hannifin	$19.85 billion	6.42	$3.53 billion	$27.42	36.80
Gates Industrial	$3.44 billion	2.03	$251.40 million	$0.97	28.43

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

Insider & Institutional Ownership

82.4% of Parker-Hannifin shares are held by institutional investors. Comparatively, 98.5% of Gates Industrial shares are held by institutional investors. 0.3% of Parker-Hannifin shares are held by insiders. Comparatively, 2.7% of Gates Industrial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Parker-Hannifin beats Gates Industrial on 10 of the 14 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 Gates Industrial

Gates Industrial Corporation PLC designs and manufactures power transmission equipment. Its products serves harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation.