Parker Hannifin (PH - Analyst Report) is set to report its second quarter 2013 results on January 18, 2013. The company posted a -9.25% surprise in the last quarter. Let’s see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Parker was primarily affected by major cancellations and rescheduling of orders in the prior quarter. The industrial business, which makes up around three-quarters of its revenue declined.
The decline was attributable to recessionary conditions in Europe, moderating growth in Asia, negative currency translations and flat organic sales. In addition, orders also declined. The five acquisitions completed in the first quarter had a positive impact on quarterly sales.
The company expects the sluggish trends to continue through the second quarter of fiscal 2013 and has therefore lowered its fiscal 2013 guidance. Earnings are now expected to be in the range of $6.15 to $6.75 per diluted share, down from the prior guidance of $7.10 to $7.90.
Our proven model does not conclusively show that Parker 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.
Negative Zacks ESP: The Most Accurate estimate stands at $1.07 while the Zacks Consensus Estimate is higher at $1.13. That is a difference of -5.3%.
Zacks Rank #3 (Hold): Parker’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.
Other Stocks to Consider
The following is one of the company’s peers you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
Altra Holdings Inc. (AIMC - Snapshot Report) -- Earnings ESP of 4.0% and Zacks #1 Rank (Strong Buy)