We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Parker-Hannifin: Acquisitions, Win Strategy to Drive Growth
Read MoreHide Full Article
Parker-Hannifin Corporation (PH - Free Report) has been firing on all cylinders of late. The company posted striking quarterly results, beating estimates strongly for the sixth consecutive quarter. The company has a stellar earnings surprise history, with an average surprise of 12.4% for the trailing four quarters, beating estimates all through.
The company has been witnessing some bullish analyst activity on the earnings estimate revision front lately as well, with estimates moving north. Over the past couple of months, the company witnessed four upward estimate revisions versus none downward. Consequently, over the past 60 days, the Zacks Consensus Estimate increased 7.6% and 8.8% to $7.38 and $8.31 for 2017 and 2018, respectively.
The company has been recording consistent bottom-line growth, largely driven by its successful cost-containment actions and the revamped Win Strategy. We expect the company to gain traction from improving demand and incremental savings from its realignment actions.
The company believes that the revamped Win strategy can help deliver a compound annual growth rate in earnings per share of 8% over the coming five years. Parker-Hannifin is also targeting segment operating margins of 17%. We believe that the improvised “Win Strategy” will aid Parker-Hannifin’s growth momentum.
Parker-Hannifin has recently been very active on the acquisition front, as a means to supplement its organic sales growth and fortify its core business. The company has acquired CLARCOR (its most notable acquisition till date), which will be integrated into its filtration business, helping double the sales of this unit.
CLARCOR is bringing a range of industrial air and liquid filtration products and technologies to the table, which will significantly bolster Parker-Hannifin’s filtration product suite. Moreover, this acquisition will unlock fresh recurring revenue streams for Parker-Hannifin’s Filtration Group as 80% of CLARCOR’s revenue is generated through aftermarket sales. The company is bullish on the integration of CLARCOR, with its filtration business, which will help it double sales at this unit.
Also, the company made a strategic product line addition to its Hydraulics Unit with the Helac acquisition, which will bolster revenues. Helac specializes in the design and manufacture of helical rotary actuators. The addition of Helac will aid Parker-Hannifin in expanding its hydraulics product portfolio and cater to customers in a wide variety of markets.
We believe that these acquisitions will drive growth and expansion for the company in the times to come.
To conclude, Parker-Hannifin’s overarching Win Strategy has proven to be a tried and tested growth driver for its key financials. Moreover, the company’s diligent global restructuring initiatives are also proving conducive to profitability. These initiatives helped Parker-Hannifin offset weakness in some key regions, thus strengthening the company’s position in end markets. Encouragingly, the company has been witnessing stabilization in most of its key end markets, indicating brighter prospects in the near future.
Barnes Group has a solid earnings surprise history for the trailing four quarters, having beaten estimates thrice, for an average beat of 4.4%.
Altra Industrial has a positive earnings surprise history, with an average of 12.5% for the trailing four quarters, beating estimates all through.
Applied Industrial Technologies has managed to beat estimates thrice in the past four quarters, for a positive earnings surprise of 6.2%.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Parker-Hannifin: Acquisitions, Win Strategy to Drive Growth
Parker-Hannifin Corporation (PH - Free Report) has been firing on all cylinders of late. The company posted striking quarterly results, beating estimates strongly for the sixth consecutive quarter. The company has a stellar earnings surprise history, with an average surprise of 12.4% for the trailing four quarters, beating estimates all through.
The company has been witnessing some bullish analyst activity on the earnings estimate revision front lately as well, with estimates moving north. Over the past couple of months, the company witnessed four upward estimate revisions versus none downward. Consequently, over the past 60 days, the Zacks Consensus Estimate increased 7.6% and 8.8% to $7.38 and $8.31 for 2017 and 2018, respectively.
The company has been recording consistent bottom-line growth, largely driven by its successful cost-containment actions and the revamped Win Strategy. We expect the company to gain traction from improving demand and incremental savings from its realignment actions.
The company believes that the revamped Win strategy can help deliver a compound annual growth rate in earnings per share of 8% over the coming five years. Parker-Hannifin is also targeting segment operating margins of 17%. We believe that the improvised “Win Strategy” will aid Parker-Hannifin’s growth momentum.
Parker-Hannifin has recently been very active on the acquisition front, as a means to supplement its organic sales growth and fortify its core business. The company has acquired CLARCOR (its most notable acquisition till date), which will be integrated into its filtration business, helping double the sales of this unit.
CLARCOR is bringing a range of industrial air and liquid filtration products and technologies to the table, which will significantly bolster Parker-Hannifin’s filtration product suite. Moreover, this acquisition will unlock fresh recurring revenue streams for Parker-Hannifin’s Filtration Group as 80% of CLARCOR’s revenue is generated through aftermarket sales. The company is bullish on the integration of CLARCOR, with its filtration business, which will help it double sales at this unit.
Also, the company made a strategic product line addition to its Hydraulics Unit with the Helac acquisition, which will bolster revenues. Helac specializes in the design and manufacture of helical rotary actuators. The addition of Helac will aid Parker-Hannifin in expanding its hydraulics product portfolio and cater to customers in a wide variety of markets.
We believe that these acquisitions will drive growth and expansion for the company in the times to come.
To conclude, Parker-Hannifin’s overarching Win Strategy has proven to be a tried and tested growth driver for its key financials. Moreover, the company’s diligent global restructuring initiatives are also proving conducive to profitability. These initiatives helped Parker-Hannifin offset weakness in some key regions, thus strengthening the company’s position in end markets. Encouragingly, the company has been witnessing stabilization in most of its key end markets, indicating brighter prospects in the near future.
Stocks to Consider
Other stocks in the Manufacturing - General Industrial industry that are worth a look now include Barnes Group, Inc. (B - Free Report) , Altra Industrial Motion Corp. and Applied Industrial Technologies Inc. (AIT - Free Report) .
Barnes Group has a solid earnings surprise history for the trailing four quarters, having beaten estimates thrice, for an average beat of 4.4%.
Altra Industrial has a positive earnings surprise history, with an average of 12.5% for the trailing four quarters, beating estimates all through.
Applied Industrial Technologies has managed to beat estimates thrice in the past four quarters, for a positive earnings surprise of 6.2%.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>