Comfort Systems USA (NYSE: FIX) and Parker-Hannifin (NYSE:PH) are both industrials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, dividends, valuation, earnings, analyst recommendations and profitability.

Dividends

Comfort Systems USA pays an annual dividend of $0.30 per share and has a dividend yield of 0.7%. Parker-Hannifin pays an annual dividend of $2.64 per share and has a dividend yield of 1.4%. Comfort Systems USA pays out 17.5% of its earnings in the form of a dividend. Parker-Hannifin pays out 33.9% 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 raised its dividend for 4 consecutive years. Parker-Hannifin is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Comfort Systems USA and Parker-Hannifin’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Comfort Systems USA $1.63 billion 0.97 $64.89 million $1.71 24.88
Parker-Hannifin $12.03 billion 2.07 $983.41 million $7.79 24.01

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

Profitability

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

Net Margins Return on Equity Return on Assets
Comfort Systems USA 3.76% 16.49% 8.14%
Parker-Hannifin 8.37% 23.61% 8.13%

Institutional and Insider Ownership

92.2% of Comfort Systems USA shares are held by institutional investors. Comparatively, 78.3% of Parker-Hannifin shares are held by institutional investors. 3.5% of Comfort Systems USA shares are held by company insiders. Comparatively, 1.1% of Parker-Hannifin shares are held by company 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.

Risk & Volatility

Comfort Systems USA has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Parker-Hannifin has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Comfort Systems USA and Parker-Hannifin, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Comfort Systems USA 0 4 1 0 2.20
Parker-Hannifin 0 7 13 0 2.65

Comfort Systems USA presently has a consensus target price of $63.00, suggesting a potential upside of 48.06%. Parker-Hannifin has a consensus target price of $187.95, suggesting a potential upside of 0.48%. Given Comfort Systems USA’s higher probable upside, equities analysts clearly believe Comfort Systems USA is more favorable than Parker-Hannifin.

Summary

Parker-Hannifin beats Comfort Systems USA on 11 of the 17 factors compared between the two stocks.

About Comfort Systems USA

Comfort Systems USA, Inc. is a provider of mechanical contracting services, which principally includes heating, ventilation and air conditioning (HVAC), plumbing, piping and controls, as well as off-site construction, electrical, monitoring and fire protection. As of December 31, 2016, the Company installed, maintained, repaired and replaced products and systems throughout its 35 operating units in 84 cities and 91 locations throughout the United States. The Company operates primarily in the commercial, industrial and institutional HVAC markets and offers services in the industrial, healthcare, education, office, technology, retail and government facilities. The Company provides a range of construction, renovation, expansion, maintenance, repair and replacement services for mechanical and related systems in commercial, industrial and institutional properties. The Company also provides remote monitoring of temperature, pressure, humidity and air flow for HVAC systems.

About Parker-Hannifin

Parker-Hannifin Corporation is a manufacturer of motion and control technologies and systems, providing precision engineered solutions for a range of mobile, industrial and aerospace markets. The Company operates through segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial Segment is an aggregation of several business units, which manufacture motion-control and fluid power system components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. The Diversified Industrial Segment consists of Automation Group, Engineered Materials Group, Filtration Group, Fluid Connectors Group, Hydraulics Group and Instrumentation Group. The Aerospace Systems Segment produces hydraulic, fuel, pneumatic and electro-mechanical systems and components, which are utilized on domestic commercial, military and general aviation aircrafts.

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