Parker-Hannifin Not Quite Paused, But Growth Has Slowed

Parker-Hannifin's (PH) fiscal third quarter (calendar first quarter) earnings reflected a lot of my concerns about slowing short-cycle markets, with management noting weakness in "general industrial", machine tool, autos, upstream oil & gas, power gen, and semis - something I've been outlining for a little while now. What's more, with destocking continuing through the June quarter and the possibility for an intensified tariff trade war with China looming, I'm still concerned that the short-cycle markets could decelerate further, even though Parker-Hannifin reported some improvement in orders in April.

I thought Parker-Hannifin shares offered some interesting upside when I last wrote about them if at the cost of some elevated short-term risk. The shares have outperformed the broader industrial space a bit since then, and my feelings about the stock remain more or less the same - this is one of the relatively rare reasonably-priced (if not slightly undervalued) quality industrials, and although I do think there's economic cycle risk over the next 12-24 months, I think this is a solid name for long-term ownership.

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Parker-Hannifin Not Quite Paused, But Growth Has Slowed