"The Bottom Line Parker Hannifin has been a remarkably consistent producer of free cash flow and a steady improver in metrics like return on invested capital. That definitely speaks well to management and the underlying quality of the business.
There is little question that perception and investor worries about Europe (and to a lesser extent China) are likely to weigh on these shares for at least the first half of 2012. The question then shifts to whether companies like Siemens are right and the back half of the year sees a solid rebound.
Even with lower expectations in place, these shares look undervalued at present. A forecast of 6% compound free cash flow growth over the next decade does not seem excessively optimistic, but is sufficient to generate a triple-digit fair value for Parker Hannifin shares. While a miss-and-lower may put these shares in the dog house for a spell, value investors may want to keep a careful eye on this name and consider adding it as a high-quality industrial name."