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Parker-Hannifin (PH) to Post Q1 Earnings: What's in Store?

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Parker-Hannifin Corporation PH is slated to report first-quarter fiscal 2019 (ended September 2018) results on Nov 1, before the market opens.

The company pulled off an average positive earnings surprise of 8.20% over the preceding four quarters. Notably, Parker-Hannifin’s fourth-quarter fiscal 2018 adjusted earnings of $3.22 per share outpaced the Zacks Consensus Estimate of $2.91.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

The company’s innovative Win Strategy will likely boost Parker-Hannifin’s revenues and profitability in the quarters ahead. The company expects that favorable end-market conditions, ongoing footprint-consolidation moves within the North America segment, as well as solid commercial, military after-market, and military original equipment manufacturing sales from the Aerospace segment will drive its revenues, moving ahead.

The Zacks Consensus Estimates for first-quarter fiscal 2019 revenues of Parker-Hannifin’s Aerospace, North America and International segments are currently pegged at $569 million, $1,695 million and $1,274 million, higher than $531 million, $1,595 million and 1,239 million recorded in the year-ago quarter.

However, Parker-Hannifin has noted that loss of sales in fiscal 2018 (on account of filtration divestiture) and unfavorable foreign-currency translation impact will weigh over its near-term top-line performances.

The company believes that increased synergy savings from CLARCOR acquisition (March 2017), stellar revenues and benefits of ongoing business-realignment moves will enhance its profitability in the upcoming quarters. Nonetheless, expenses associated with business-restructuring initiatives, CLARCOR integration cost, high interest expense (on account of CLARCOR buyout debt issuance), and escalating general & administrative expenses will likely dent its bottom-line performance in the upcoming quarters.

Parker-Hannifin anticipates to record adjusted earnings of roughly $2.45 (at the mid-point) in the fiscal first quarter. However, the view excludes the projected 3 cents per share CLARCOR integration cost, as well as an estimated 2 cents per share business realignment expenses.

The Zacks Consensus Estimates for the fiscal first-quarter operating income of Parker-Hannifin’s Aerospace, North America and International segments are currently pinned at $86 million, $274 million and $199 million, higher than $77 million, $256 million and 192 million recorded in the year-earlier quarter.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) for a likely earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as we will see below.

Earnings ESP: Parker-Hannifin has an Earnings ESP of -0.12%. The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is currently pegged at $2.51.

Parker-Hannifin Corporation Price and EPS Surprise

 

Parker-Hannifin Corporation Price and EPS Surprise | Parker-Hannifin Corporation Quote

Zacks Rank: Parker-Hannifin’s Zacks Rank of 3, when combined with a negative Earnings ESP, makes surprise prediction inconclusive.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks in the Zacks Industrial Products sector that you may want to consider, as our model shows that these have the right combination of elements to come up with an earnings beat:

Flowserve Corporation FLS has a Zacks Rank of 2 and an Earnings ESP of +1.72%. You can see the complete list of today’s Zacks #1 Rank stocks here.

HD Supply Holdings, Inc. HDS has a Zacks Rank #2 and an Earnings ESP of +1.95%.

Kennametal Inc. KMT has a Zacks Rank of 2 and an Earnings ESP of +0.22%.

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