Will Parker Hannifin (PH) Miss Earnings Ests? - Analyst Blog

By Zacks Equity Research,

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Parker Hannifin Corporation ( PH ) is set to report second-quarter 2014 results before the opening bell on Jan 22. In the last quarter, Parker posted a +13.6% earnings surprise.

However, due to the weakness in industrial North American market and the uncertain economic environment, we are skeptical about its chances of an earnings beat in this quarter. Let's see how things are shaping up before this announcement.

Factors to Influence This Quarter

During the second quarter, uncertain macro economic conditions and the currency headwinds continued to be a drag on the company's profitability. Nevertheless, strong cash flow-generating capability and a strong balance sheet are its strengths. In addition, the company gives dividend hikes, reflecting its commitment to return value to shareholders.

Earnings Whispers?

Our proven model does not conclusively show that Parker Hannifin is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP : The Most Accurate estimate stands at $1.16 while the Zacks Consensus Estimate is at $1.22. That is a difference of -4.92%.

Zacks Rank #2 : Parker's Zacks Rank #2 (Buy) indicates an outperformance in the to-be reported quarter. However, Zacks Rank #2 when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter: 

Altra Holdings Inc . ( AIMC ) with earnings ESP of +8.11% and Zacks Rank #2.

Gorman-Rupp Co . ( GRC ), with earnings ESP of +4.00% and a Zacks Rank #2.

Embraer SA . ( ERJ ), with earnings ESP of +23.5% and a Zacks Rank #2.

ALTRA HOLDINGS (AIMC): Free Stock Analysis Report

EMBRAER AIR-ADR (ERJ): Free Stock Analysis Report

GORMAN RUPP CO (GRC): Free Stock Analysis Report

PARKER HANNIFIN (PH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: AIMC , ERJ , GRC , PH

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