Current article by Seth Jayson from Motley Crew can be misleading. He measures the change in current inventory level against past 12 month sales volume. He doesn't factor in the change in order entry levels or existing backlog. Parker plans it's inventory based on scheduled order entry more so than current daily sales. The majority of Parker's volume goes to OEM's and distributors who place orders for future scheduled deliveries to satisfy their or their customers schedules of production. This may not be consistent with the rate of volume change over the past 12 months particularly with those customers who may have significant changes in their demands. Significant also is the fact that those inventory levels he is measuring come from dozens of divisions (self managed) within eight different and distinct groups. Their markets, products and customer lists vary to a great degree wherein measuring them as a whole can be very misleading. Suggest these analysts learn more about the companies they chose to write and opinionate about if they expect to influence stock investments.
>"Significant also is the fact that those inventory levels he is measuring come from dozens of divisions (self managed) within eight different and distinct groups"<.
I hope your not implying they haven't a true control number via this statement. 8 div. or 16 they still should have and accurate count since the div. I work in keep a daily running tab and any give day you could punch up the results. Each division in itself keep a read and reported accordling, your comment sounds like "self-managed" is a bad thing and not worth the process when in fact it causes a more atuned group to be accountable to the whole in my opinion.Inventory turn over is deffinantly well accounted and leaving $dollars sitting on the shelf for long periods of time isn't a factor at PH.
Parker has been very lean in this aspect and can tool up very quickly so I see a no brainer in inventory here. They need to focus on over spending on perks and bonuses for some savings in these times when comp./ orders start to get sparse from lack of world confidence and economical down turns, if someone wants to bring attention to something. Start keeping a rolling inventory on the "OPS" if you want to be useful.
Did you really read my post or understand it? Perhaps not as your response is way off track. I'm not talking about how accurate their inventory levels are and whether they keep good track of same. The article I was referring too has the analyst comparing how much total inventory has grown or decreased from one period to another compared to the change in sales volume over that same period stating that inventory should not be growing more than the sales volume. He states that inventory growth should not be more than sales growth and the lower the relationship of the two the better for the company. What I referred to was that the circumstances of inventory and sales of one division to another individually varies and certainly varies between groups such as Aerospace, Seal, Automotive and the Industrial Groups because of their different markets and customer base. Current open backlog and future order entry is far more meaningful to inventory levels rather than past sales volume. This analyst is comparing the total corporate combined inventory and sales volume. Mixing apples and oranges. Suggest you go back and read both the article in question and my post. Maybe you'll understand. That is if you can ever get off the kick of management compensation and perks. Reading your past posts which always leans toward your having a typical labor vs. management twist. I don't think the majority of Parker shareholders have any real problem with how much Parker management gets paid. They've done a very good job of delivering good results.