We recently maintained a Neutral recommendation on
Parker-Hannifin Corporation
(
PH
).
Parker-Hannifin Corporation is a leading worldwide full-line
diversified manufacturer of motion and control technologies and
systems, including fluid power systems, electromechanical controls
and related components. In addition to motion and control products,
the company is also a leading worldwide producer of fluid
purification, fluid and fuel control, process instrumentation, air
conditioning, refrigeration, electromagnetic shielding and thermal
management products and systems.
Parker-Hannifin's manufacturing, service, distribution and
administrative facilities are located in 40 states and in 47
foreign countries. The company's motion and control technologies
and systems are used in the products of its three principal
business segments: Industrial; Aerospace; and Climate &
Industrial Controls. The products are sold as original and
replacement equipment through product and distribution centers
worldwide
On October 18, 2011, the company came out with record
first-quarter fiscal 2012 earnings per share of $1.91, which was
above the Zacks Consensus Estimate of $1.70 and prior-year earnings
of $1.51.
The company's total revenue increased by 14.3% year over year to
$3.2 billion, which is 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%.
Industrial International segment achieved highest sales growth
on a year-over-year basis, with its revenue increasing by 17.9% to
$1.3 billion. However, the segment revenue declined from $1.4
billion in the fourth quarter of 2011.
Industrial North America segment revenue increased 13.1% to $1.2
billion. Aerospace revenue increased 13.9% year over year to $497.5
million. Climate and Industrial Controls segment revenue spiked
3.3% to $242.5 million.
Parker Hannifin increased its fiscal 2012 earnings per share
guidance in the range of $7.25 - $7.85 from $6.70 - $7.50. The
increased expectation was led by excellent first-quarter result,
solid order intake and a decline in share count.
The company had a good start in 2012, with first-quarter sales
reaching an all-time record of $3.2 billion, an increase of 14%
over last year. Parker-Hannifin's incremental margin return on
sales was 20% for the quarter, which was above the company's
guidance of about 16%.
Parker-Hannifin continues to benefit from a recovering economy
and implementation of the Win Strategy. The company focuses on
providing leading services to its customers, lean operations and
investments in new developments, which will help it to achieve
strong earnings growth ahead. Net income in the quarter reached a
record high of $298 million. Net income margin was a record 9.2%.
Diluted earnings in the quarter were also at an all time high.
However, a depressed market condition remains a matter of
concern for the company. Orders for the Climate and Industrial
Control segment inched down 1% due to weakness in some of their
markets. Major competitors of Parker-Hannifin are
Eaton Corporation
(
ETN
),
EMERSON ELECTRIC CO.
(
EMR
) and
Honeywell International Inc.
(
HON
).
We expect the company to perform in line with the market and
hence maintained a Neutral recommendation.
EMERSON ELEC CO (
EMR
): Free Stock Analysis Report
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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