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Parker-Hannifin Corporation (NYSE:PH) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$3.2b, some 8.7% above estimates, and statutory earnings per share (EPS) coming in at US$2.47, 51% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
After the latest results, the consensus from Parker-Hannifin's 15 analysts is for revenues of US$13.3b in 2021, which would reflect a discernible 2.2% decline in sales compared to the last year of performance. Per-share earnings are expected to grow 10% to US$10.20. Before this earnings report, the analysts had been forecasting revenues of US$12.9b and earnings per share (EPS) of US$8.75 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.
It will come as no surprise to learn that the analysts have increased their price target for Parker-Hannifin 8.0% to US$251on the back of these upgrades. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Parker-Hannifin at US$280 per share, while the most bearish prices it at US$140. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Parker-Hannifin's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with the forecast 2.2% revenue decline a notable change from historical growth of 5.1% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.3% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Parker-Hannifin is expected to lag the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Parker-Hannifin following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Parker-Hannifin going out to 2024, and you can see them free on our platform here..
It is also worth noting that we have found 2 warning signs for Parker-Hannifin that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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