Parker Hannifin Trying To Make Its Case For A Less Cyclical Future

I thought Parker-Hannifin (PH) had some appeal on a relative basis back in May, and while the share price performance since then hasn’t been spectacular, the shares have indeed outperformed the industrial peer group. Since that article, a few things have become clear – there’s definitely a short-cycle industrial slowdown, and Parker-Hannifin is looking to large inorganic investments in aerospace to create a less cyclical business mix.

Parker-Hannifin is more of a “show me” stock now in my opinion; management talks a good game about outgrowing peers on an organic basis and improving margins, but the company’s historical track record isn’t particularly strong. Moreover, I think management’s guide for the second half of its fiscal year 2020 (the first half of calendar 2020) could prove too optimistic. The valuation isn’t bad, and I think this is a good business, but it’s tough for me to work up much enthusiasm for a definitive buy/avoid call.

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Parker Hannifin Trying To Make Its Case For A Less Cyclical Future