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Why Is Parker-Hannifin (PH) Up 8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Parker-Hannifin (PH - Free Report) . Shares have added about 8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Parker-Hannifin due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Parker-Hannifin Q1 Earnings Top, Revenues Miss Estimates

Parker-Hannifin reported mixed results for first-quarter fiscal 2019 (ended September 2018).

Earnings/ Revenues

Quarterly adjusted earnings came in at $2.84 per share, up 26.8% year over year. The bottom line also outpaced the Zacks Consensus Estimate of $2.51.

Revenues in the fiscal first quarter were $3,479.3 million, up 3.4% year over year. The revenue figure improved 6% year over year, organically, during the quarter. However, the top line fell short of the Zacks Consensus Estimate of $3,534 million.

Segmental Break-Up

Revenues in the Diversified Industrial Segment came in at $2,914.8 million, up 2.9% year over year.

Revenues in the Aerospace Systems segment came in at $564.5 million, up 6.3% year over year.

Costs/Margins

Cost of sales in the fiscal first quarter was $2,594.8 million, up 2.8% year over year. Selling, general and administrative expenses were $394.3 million, slightly down from $397 million incurred in the year-ago quarter. Adjusted operating margin in the fiscal first quarter was 17.2%, up 120 basis points (bps) year over year.

Balance Sheet/Cash Flow

Exiting the fiscal first quarter 2019, Parker-Hannifin had cash and cash equivalents of $952.1 million, up from $822.1 million recorded as of Jun 30, 2018. Long-term debt stood at $4,313.2 million, down from $4,318.6 million recorded at the end of fiscal 2018.

In the first three months of fiscal 2019, the company generated $159.4 million cash from operating activities, down from $238 million witnessed in the comparable period last year. Capital expenditures totaled $42.1 million, down 46.9% year over year.

Outlook

Parker-Hannifin intends to boost its near-term revenues and profitability on the back of the company’s Win Strategy. Based on favorable market conditions, the company has raised its earnings view for fiscal 2019 from $10.90-$11.50 to $11.10-$11.70 per share. Organic revenue growth is predicted to lie in the 2.5-5.3% range, higher than the prior view of 2.3-5.1%.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

Currently, Parker-Hannifin has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Parker-Hannifin has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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