Parker-Hannifin Corporation Just Beat EPS By 21%: Here's What Analysts Think Will Happen Next
Investors in Parker-Hannifin Corporation (NYSE:PH) had a good week, as its shares rose 8.2% to close at US$510 following the release of its quarterly results. Revenues were US$4.8b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$5.23, an impressive 21% ahead of estimates. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Parker-Hannifin
Following last week's earnings report, Parker-Hannifin's 18 analysts are forecasting 2024 revenues to be US$19.9b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$20.68, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$19.9b and earnings per share (EPS) of US$19.32 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 9.3% to US$532, suggesting that higher earnings estimates flow through to the stock's valuation as well. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Parker-Hannifin analyst has a price target of US$627 per share, while the most pessimistic values it at US$300. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Parker-Hannifin's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.7% growth on an annualised basis. This is compared to a historical growth rate of 7.2% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.2% per year. Factoring in the forecast slowdown in growth, it seems obvious that Parker-Hannifin is also expected to grow slower than other industry participants.
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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Parker-Hannifin. Long-term earnings power is much more important than next year's profits. We have forecasts for Parker-Hannifin going out to 2026, and you can see them free on our platform here.
You still need to take note of risks, for example - Parker-Hannifin has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
