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Parker-Hannifin (PH) to Post Q4 Earnings: Is a Beat in the Cards?

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Parker-Hannifin Corporation (PH - Free Report) is slated to report fourth-quarter fiscal 2021 (ended June 2021) results on Aug 5, before market open.

The company pulled off a surprise of 37.36%, on average, in the last four quarters, beating on earnings all through. Parker-Hannifin’s third-quarter fiscal 2021 (ended March 2020) adjusted earnings of $4.11 per share outpaced the Zacks Consensus Estimate of $3.75 by 9.60%.

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In the past six months, shares of the company have gained 13.6% compared with 10.8% increase of the industry it belongs to.

Factors at Play

Strength across Parker-Hannifin’s military, life sciences, refrigeration, farm and agriculture, and semiconductor end markets is likely to have augmented its top-line performance in fourth-quarter fiscal 2021. Also, the company’s unique Win Strategy coupled with its growth-based investments might have been tailwinds in the quarter.

Acquired assets boosted the company’s sales by 3.8% in first three quarters of fiscal 2021, a trend that is most likely to have continued in the to-be-reported quarter, owing to the benefits from its buyouts of Exotic Metals Forming Company and LORD Corporation in fiscal 2020 (ended June 2020).  The Exotic Metals Forming buyout has been complementing its aerospace products and solutions, while the acquisition of LORD Corporation has been boosting its engineered materials’ product and solutions offerings.

Parker-Hannifin’s several cost-control actions, including the reduction of discretionary expenses, are also expected to have helped it maintain a healthy margin performance in the fiscal fourth quarter. In fiscal 2021, the company is likely to have achieved savings of $225 million.

However, the coronavirus outbreak-led end-market challenges, particularly at aerospace, oil and gas, construction equipment and material handling end markets are likely to have adversely impacted its top-line performance in the fiscal fourth quarter. Expenses associated with the company’s realignment program might have also affected the company’s profitability.

The Zacks Consensus Estimate for fourth-quarter fiscal 2021 revenues for the Aerospace segment is pegged at $625 million, relatively flat on a year-over-year basis. The consensus estimate for revenues for the North America operations of the Diversified Industrial segment stands at $1,876 million, indicating growth of 30.3% from the year-ago quarter reported figure. The consensus mark of $1,411 million for International operations of the Diversified Industrial segment indicates a year-over-year increase of 28.7%.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This is the case here as given below:

Earnings ESP: Parker-Hannifin has an Earnings ESP of +1.77%, as the Most Accurate Estimate is pegged at $4.40, higher than the Zacks Consensus Estimate of $4.32.

Zacks Rank: The company carries a Zacks Rank #3.

Other Key Picks

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

Eaton Corporation plc (ETN - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company (DE - Free Report) has an Earnings ESP of +11.97% and Zacks Rank #2.

Donaldson Company, Inc. (DCI - Free Report) has an Earnings ESP of +3.03% and a Zacks Rank of 3.