Parker Hannifin: Long-Term Opportunity At The Cost Of Short-Cycle Risk

I thought the valuation at Parker Hannifin (PH) was getting interesting back in August, and the shares outperformed a bit relative to multi-industrial peers until reporting fiscal second quarter (calendar fourth quarter) earnings. Not unlike Eaton (ETN), Parker Hannifin offers some challenging trade-offs between a relatively bullish management team, further opportunities for margin improvement, and interesting valuation against what I think is a tricky short-cycle set-up that could see weaker results and expectations as 2019 rolls on. I think investors will sleep better in general with names like Honeywell (HON) and Emerson (EMR) (and maybe Ingersoll-Rand (IR) ), but the valuation on Parker Hannifin could make those short-term risks worth taking for investors with a longer-term orientation.

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Parker Hannifin: Long-Term Opportunity At The Cost Of Short-Cycle Risk