Like many industrial stocks, Parker-Hannifin (PH)
seems caught in that tug-of-war between good present-day results and
growing worries about the prospects for continued growth as 2018 moves
along. Although Parker-Hannifin's orders have remained pretty strong,
shrinking ISM new order numbers are a warning sign and expectations may
be too high for incremental margins in the next few quarters.
Parker-Hannifin
management has done alright with segment-level margins in recent years,
and I like the opportunities the company has ahead in filtration,
aerospace, and engineered materials as well as its core motion and
flow/process control operations. The shares do look undervalued if
Parker-Hannifin can deliver on its long-term margin targets, but I
wouldn't say that expectations are at a can't-miss level.
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Margin Leverage Can Drive Parker-Hannifin Higher, But The Outlook Is A Little Murky
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