2D·

The planned PH sale - well-founded decision or misinterpretation based on half-knowledge?

I took a closer look at Parker Hannifin shares over the last few hours and found almost no good reasons to sell. Except of course for the ubiquitous overvaluation of US stocks...

I started with this share because it is the smallest position in my portfolio and therefore doesn't make sense simply because of its size.

In the chart, my smallest stock positions in ascending order of position size:

Now I have found out the following:

The stock is currently trading at around $723.

As of Q1, Parker has $9,370 million in debt and about $408 million in cash and cash equivalents.

If you now subtract the have from the should and divide it by the number of shares, around 128.44 million, I arrive at a net debt per share of around $69.8.

Worse than in the previous year.

In combination with the high valuation, I think I should take my approx. 13% quick book profit and reallocate.

Kate🦋

@Iwamoto

1Wk·

My securities account as of today - Update

Here in the link my previous portfolio (unfortunately can no longer be updated here at the moment) and the train of thought of the last months briefly summarized:

https://getqu.in/4Kl605/

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This is my portfolio as of today.

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I probably won't manage to get rid of individual stocks completely.

But at least I could eliminate supposedly unnecessary overweightings and overlaps and focus more on second-tier stocks, such as $CALM (+0.1%)
$TXRH (-0.91%)
$SOFI (+0.9%)

In any case, I haven't reallocated much since the article linked above.

I'm taking it rather slowly, as it still feels wrong to me, although the opposite would be more accurate.

So far I have sold the following stocks:

Lotus $LOTB (+0.66%) -7,3 %

Hims $HIMS (-0.07%) +202 %

DE Telekom $DTE (-0.41%) +-0

Church&Dwight $CHD (+0.17%) -6 %

Ecolab $ECL (-1.14%) +1 %

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Below is the X-Ray, which illustrates overweightings and allocations. Nvidia and Apple are not in my portfolio as individual stocks, but are strongly represented due to the ETFs. However, I have $MSFT (-0.94%) and $GOOGL (+0.63%) shares in the portfolio, which leads to an overweighting. Alphabet convinces me in many ways, so the overweight could make sense here. But with Microsoft, the ETF share could actually be enough for me. I am therefore considering adding an SL to Microsoft, for example 7% below the current price level.

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13 Comments

JCM@TheStoic

This is correct in itself, but you should rather look at short-term liabilities and long-term liabilities and analyze what liquidity is available for this and how the debts have changed dynamically over the years and what the management says about this in the earning calls and how the corresponding things were then implemented.

PH is a very stable company, but it has also grown very strongly in recent years. I would rather ask myself whether they can maintain this sales and profit growth over the next few years.

Basically, however, the trend remains your friend, so as long as the share is going well upwards, I would simply hold the share and hedge it with a stop loss on the downside. Especially since you don't have to worry about opportunity costs here, as PH has outperformed the S&P in recent years.

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Tenbagger2024@Tenbagger2024

As far as I have seen, debt is being reduced very nicely.
And in 2027, the free cash flow is even higher than the liabilities.

https://www.finanzen.net/schaetzungen/parker_hannifin

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Kate🦋@Iwamoto

@Tenbagger2024 oh no, so better hold after all?

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Tenbagger2024@Tenbagger2024

@Iwamoto
From the perspective of debt, I don't see such a big problem here.
Debt often even means investments or a takeover, etc.
You should perhaps compare the capex here.
Therefore, debt should not always be viewed negatively. As long as they are in a healthy ratio

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Kate🦋@Iwamoto

@Tenbagger2024 amounted to USD 400 million in 2024, i.e. around USD 3.10 per share.

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Tenbagger2024@Tenbagger2024

@Iwamoto
If I look at $CW, the debt ratio here is similar.
And at $TDG it is even significantly higher

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Kate🦋@Iwamoto

@Tenbagger2024 Fortunately, neither of them are in my portfolio. That's two problems less. 😅
At $LOTB, the equity even exceeds the long-term liabilities. Possibly also with $APH and $ZTS, but I haven't quite figured that out yet

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Tenbagger2024@Tenbagger2024

@Iwamoto
However, I have seen at $PH that the debt ratio has remained constant over the years. So I wouldn't have any reason to worry.

But I don't like the profit growth and the resulting constant P/E ratio.
Nor do I like the PEG.

https://www.onvista.de/aktien/kennzahlen/Parker-Hannifin-Aktie-US7010941042

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Yoshika 🦋.@Yoshika

@Tenbagger2024
You yourself have classified capex as a strategically sensible lever. PEG penalizes reinvestments mathematically. And if the P/E ratio remains stable despite this, it should be seen as an indication that the market is rewarding precisely this strategy

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Tenbagger2024@Tenbagger2024

@Yoshika
But I tend to prefer companies where the expected P/E ratio falls due to earnings growth.

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Yoshika 🦋.@Yoshika

@Tenbagger2024
Yes, I think that would be pretty elegant :) Growth immediately, key figures in decline.
But those who invest today will grow tomorrow. The PEG doesn't see that. Sometimes the market does.

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Yoshika 🦋.@Yoshika

USD 69.80 per share ..I should urgently do the math with my candidates ❤️.

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Yoshika 🦋.@Yoshika

@Yoshika
Perhaps debt/EBITDA would also be a complementary angle ... depending on the perspective.

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