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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