We recently maintained a Neutral recommendation on Cleveland, Ohio-based, Parker Hannifin (PH - Analyst Report).
The company is a leading worldwide provider of 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 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 achieve strong earnings growth ahead.
The company recently came out with its fourth-quarter fiscal 2011 earnings results, reporting earnings per share of $1.79, slightly below the Zacks Consensus Estimate of $1.80 but above the prior-year earnings of $1.35.
For full-year fiscal 2011, earnings per share of $6.37, were in line with the Zacks Consensus Estimate. The company achieved record earnings result during the year and also a record sales and earnings for the quarter.
The company’s segments - Industrial International segment achieved highest sales growth, with its revenue increasing by 33.8% year over year to $1.4 billion. This was followed by Industrial North America segment revenue surging 18.6% to $1.2 billion and Climate and Industrial Controls segment revenue by 15.2% to $276.8 million. Aerospace revenue was up 9.3% to $521.9 million.
Parker Hannifin expects fiscal 2012 earnings per share to be in the range of $6.70 to $7.50. The company continues to focus on implementation of Win Strategy, a prime benefactor for Parker. Parker-Hannifin aims on providing leading services to its customers, new product developments and system innovations. The company also targets acquisitions for growth.
However, earnings in the quarter was negatively impacted by higher charges related to litigation, incentive compensation and asset write-offs. The company expects next quarter’s earnings to be affected by higher nonrecurring expenses in Aerospace, as well as higher other expenses due to stock option; and higher taxes offset by favorable interest in share count as a result of share repurchases. Major competitors of Parker are Eaton Corporation (ETN - Analyst Report) and Honeywell International Inc. (HON - Analyst Report).
Thus, we expect the company to perform in line with the market and hence maintained a Neutral recommendation .