Earnings Preview: Parker-Hannifin - Analyst Blog
January 18 2012 - 3:45AM
Zacks
Parker-Hannifin
Corp. (PH) is slated to release its second-quarter 2012
results on Friday, January 20, 2012. The current Zacks Consensus
Estimate for second-quarter earnings per share (EPS) is $1.63,
representing an annualized growth of 17.34%.
Parker-Hannifin’s earnings were
above the Zacks Consensus Estimate in the last quarter while was
below estimate in the fourth quarter of fiscal 2011. Moreover, in
the second and third quarters, the company outperformed the Zacks
Consensus Estimate with an average positive surprise of 6.95%.
First Quarter
Highlights
Parker-Hannifin reported
first-quarter fiscal 2012 earnings per share of $1.90, slightly
below the Zacks Consensus Estimate of $1.70 and above prior-year
earnings of $1.51. The company reported record earnings result for
the quarter, which was an all time high.
Total revenue in the quarter
increased by 14.3% year over year to $3.2 billion, which was also a
record level achieved. Sales for the quarter included 1%
contribution from acquisition and 3% from currency effects. Total
orders in the quarter increased by 9%.
Agreement of Estimate
Revisions
In the last 30 days, of the
analysts providing estimates on the stock, one increased its
estimate for the second quarter while none decreased the same. For
fiscal 2012 and 2013, none of the analysts changed their
estimates.
For the second quarter, one of the
analysts increased its estimate in the last 7 days while none
changed the same for fiscal 2012 and 2013.
Magnitude of Estimate
Revisions
In the last 30 days, earnings
estimates for the second quarter 2012, fiscal 2012 and fiscal 2013
remained unchanged at $1.63, $7.47 and $8.05, respectively.
Our
Take
We believe Parker Hannifin is a
high-quality company that is showing signs of good execution. The
company is witnessing a recovery in aerospace demand, which
positively favors its future growth. MRO (Maintenance, Repair, and
Overhaul) is expected to get a boost from continued deferral of
capital investment in new machines. Parker Hannifin’s strong
exposure to MRO-type products and ability to convert net income
into free cash flow will benefit future earnings.
However, the company’s domestic and
foreign operations are subject to significant competitive
pressures. To compete successfully, the company’s Industrial
Segment and Climate & Industrial Controls Segment must excel in
terms of product quality and innovation, customer service,
manufacturing and distribution capability and price
competitiveness. Meanwhile, the Aerospace Segment must excel on the
basis of technological and engineering capability, quality,
delivery and service as well as price competitiveness. Major
competitors of Parker are Eaton Corporation (ETN)
and Honeywell International Inc. (HON)
Overall, we believe Parker-Hannifin
is all set to deliver good financial results in the second quarter
of fiscal 2012. We continue to maintain a Neutral rating on
Parker-Hannifin for the long term. The company, however, has a
Zacks #4 Rank (Sell recommendation) over the next one-to-three
months.
EATON CORP (ETN): Free Stock Analysis Report
HONEYWELL INTL (HON): Free Stock Analysis Report
PARKER HANNIFIN (PH): Free Stock Analysis Report
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