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Parker-Hannifin (PH) to Post Q2 Earnings: Is a Beat in Store?

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Parker-Hannifin Corporation PH is slated to report second-quarter fiscal 2021 (ended December 2020) results on Feb 4, before market open.

The company pulled off a positive earnings surprise of 36.91%, on average, in the last four quarters, beating estimates all through. Parker-Hannifin’s first-quarter fiscal 2021 (ended September 2020) adjusted earnings of $3.07 per share outpaced the Zacks Consensus Estimate of $2.29 by 34.1%.

In the past three months, the company’s shares have gained 21.4% compared with 7.7% growth recorded by the industry it belongs to.

Factors at Play

Parker-Hannifin is anticipated to have gained from strength in its life science, semiconductor, military, rail and power generation end markets. Also, benefits of the company’s unique Win Strategy and growth-based investments are expected to have boosted its performance in the quarter.

Moreover, the company’s acquisition of Exotic Metals Forming business (September 2019), which augments its aerospace products and solutions with unique products and proprietary manufacturing capabilities, is anticipated to have supported its top-line performance in the fiscal second quarter. Moreover, its buyout of LORD Corporation (October 2019), which has been strengthening its engineered materials’ product and solutions offerings, is anticipated to have boosted the top line.

In addition, some of the cost-control measures taken by Parker-Hannifin, including the reduction of discretionary expenses, salary and capital expenditure, are expected to have helped it maintain a healthy margin performance.

However, challenged end-market conditions amid the coronavirus crisis, particularly at oil and gas space, material handling, machine tools, construction, automotive, mining and marine are likely to have adversely impacted its top-line performance in the to-be-reported quarter. In addition, the company’s significant international presence exposes it to unfavorable movements in foreign currencies, which are expected to have affected its revenues in the fiscal second quarter.

The Zacks Consensus Estimate for Parker-Hannifin’s second-quarter fiscal 2021 revenues for the Aerospace segment is pegged at $569 million, indicating a decline of 0.7% from the previous quarter’s reported number. The consensus estimate for revenues for the North America operations of the Diversified Industrial segment stands at $1,485 million, implying a 2.8% decline from the previous quarter reported figure. The consensus mark of $1,133 million for International operations of the Diversified Industrial segment indicates sequential growth of 0.4%.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release 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 3 (Hold) to beat estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Parker-Hannifin is given below:

Earnings ESP: The company has an Earnings ESP of +2.86% as the Most Accurate Estimate is pegged at $2.67, higher than the Zacks Consensus Estimate of $2.60.

ParkerHannifin Corporation Price, Consensus and EPS Surprise

ParkerHannifin Corporation Price, Consensus and EPS Surprise
ParkerHannifin Corporation Price, Consensus and EPS Surprise

ParkerHannifin Corporation price-consensus-eps-surprise-chart | ParkerHannifin Corporation Quote

Zacks Rank: Parker-Hannifin carries a Zacks Rank #2.

Other Key Picks

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

Axon Enterprise, Inc. AXON has an Earnings ESP of +2.34% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kennametal Inc. KMT has an Earnings ESP of +30.00% and a Zacks Rank of 2.

Eaton Corporation plc ETN has an Earnings ESP of +2.33% and a Zacks Rank #3.

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