When I last wrote about Parker-Hannifin (NYSE:PH) I absolutely underestimated the market's willingness to look past a rough calendar/fiscal 2016 and start hoping for a strong V-shaped recovery in 2017. I thought Parker-Hannifin offered value back in January, but I definitely didn't expect the 40%-plus move in the stock - in-line with Eaton (NYSE:ETN) and Atlas Copco (OTCPK:ATLKY), but still on the high end of the range of the industrials I follow more closely.
A healthy skepticism bordering on paranoia is a good asset for investors, and that's particularly true when you think a stock is worth meaningfully more than before a big run. I don't think a long-term expectation of 4% revenue growth or 6% FCF growth is that bullish (and my expectations for FY 2025 are about 4% lower than that last article), but with a weak year rolling out of the model, it does support a fair value of about $125 today.
That's not a big premium to today's price, but there aren't many quality industrials trading at a discount today, and as I said, seeing any discount after the big run makes me wonder if I'm missing something.
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Parker-Hannifin Looking Ahead To Better Days