Why Parker-Hannifin Corporation (NYSE:PH) Could Be Worth Watching

Today we're going to take a look at the well-established Parker-Hannifin Corporation (NYSE:PH). The company's stock saw a significant share price rise of 34% in the past couple of months on the NYSE. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Parker-Hannifin’s outlook and value based on the most recent financial data to see if the opportunity still exists.

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What's The Opportunity In Parker-Hannifin?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 0.3% below our intrinsic value, which means if you buy Parker-Hannifin today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $693.81, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Parker-Hannifin’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Check out our latest analysis for Parker-Hannifin

What kind of growth will Parker-Hannifin generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 9.2% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Parker-Hannifin, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in PH’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on PH, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 1 warning sign for Parker-Hannifin you should be aware of.

If you are no longer interested in Parker-Hannifin, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.