Parker-Hannifin (NYSE: PH) is one of the world's largest makers of components that control the flow of industrial fluids; control systems for machinery/equipment; motion control products; fluid purification, fluid and fuel control; process instrumentation; air conditioning / refrigeration; electromagnetic shielding; and thermal management products and systems.
In general, analysts expect PH to register 10-14% revenue growth in F2008, on solid growth in industrial and aerospace work, internationally. Moreover, the global aerospace growth cycle is expected to continue through 2008 and into 2009, netting impressive results for PH.
Further, although the majority of PH's revenues is U.S.-based, and those division will not achieve their peak performance due to the barely-growing U.S. economy, Parker's international industrial/business segment is expected to continue to benefit from emerging market / developing economies work.
Also, although weakness in U.S. automotive and residential housing sectors will weigh on results, PH has executed well in the space, containing costs and seeking new work from existing clients. The Reuters F2008/F2009 EPS consensus estimates for PH are $5.49/$6.06.
The risks? A substantial, sustained decline in global economic growth and/or an unexpected downturn in the global aerospace market would hurt PH's results. Analysts are also keeping an eye on the PH's skilled labor costs.
The First Call mean rating for PH is: Buy [16 firms]. Mean 2008 target: $84 [high: $95; low: $75].
Stock Analysis: Parker-Hannifin is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from PH's shares. Sell / Stop Loss if you were to purchase shares in this company: $57.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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