Back to top

Image: Bigstock

Parker-Hannifin (PH) Q1 Earnings: Will It Beat Again?

Read MoreHide Full Article

We expect Parker-Hannifin Corporation (PH - Free Report) to beat expectations when it reports first-quarter fiscal 2017 earnings, before the opening bell on Oct 21.

In the last reported quarter, Parker-Hannifin posted a positive earnings surprise of 7.3%. The company has an excellent earnings track record, beating estimates in each of the trailing four quarters. The stock boasts an average positive surprise of approximately 11.1%.

We expect the company to continue its upbeat performance in the to-be reported quarter as well.

Why a Likely Positive Surprise?

Our proven model shows that Parker-Hannifin is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +0.64%. This is a very meaningful and leading indicator of a likely earnings surprise.

Zacks Rank: Parker-Hannifin carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. On the other hand, Sell-rated stocks (#4 and 5) should not be considered going into an earnings announcement.

The combination of Parker-Hannifin’s Zacks Rank #3 and ESP of +0.64% makes us confident of an earnings beat in the upcoming report.

PARKER HANNIFIN Price and EPS Surprise

 

PARKER HANNIFIN Price and EPS Surprise | PARKER HANNIFIN Quote

Growth Factors this Past Quarter

Parker-Hannifin’s first-quarter fiscal 2017 results are expected to benefit from its “Win Strategy”. This plan focuses on four key areas including customer engagement, customer experience, profitable growth and financial performance. Parker-Hannifin is well on track to achieve these goals and believes it can deliver a compound annual growth rate in earnings per share of 8% over the next five years.

We believe the overarching Win Strategy will be a significant growth driver for operating margins in the soon-to-be reported quarter. Moreover, the company has reaped significant benefits from its global restructuring initiatives undertaken over the past few quarters. These initiatives helped Parker-Hannifin offset weakness in some key regions, thus strengthening the company’s position in end-markets.

This apart, Parker-Hannifin’s extensive distribution network, which sells to the more lucrative maintenance, repair and operations (MRO) markets, is expected to act as one of the main profit churners. Also, robust aerospace business and market traction of some of the recently launched products like Tank Vent filter, stainless steel 221G solenoid valves, Pro Display 10, UX Toolkit and F3 Hydraulic Truck Pump are expected to boost the top line in the fiscal first quarter.

Parker-Hannifin’s recent acquisitions are also expected to aid core business growth. The recently completed buyout of U.K.-based firm, President Engineering Group Limited (“PEGL”), has provided solid support to its Instrumentation Group business. During the first quarter of fiscal 2017, Parker-Hannifin took over two of Germany-based equipment manufacturer Arnold Jäger Holding GmbH‘s operating units to strengthen its global sealing market hold. We believe such strategic buyouts will prove conducive to growth in the fiscal first quarter and beyond.

Other Stocks That Warrant a Look

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

AO Smith Corp. (AOS - Free Report) has an earnings ESP of +2.22% and a Zacks Rank #2. The company is slated to report results on Oct 26.

Caterpillar Inc. (CAT - Free Report) has an earnings ESP of +2.7% and a Zacks Rank #2. The company is scheduled to release its financial numbers on Oct 25.

Casella Waste Systems Inc. (CWST - Free Report) – scheduled to report results on Nov 3 – has an earnings ESP of +90% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand.Click to see them now>>

Published in