Parker-Hannifin (PH) to Post Q4 Earnings: Is a Beat in Store?
Parker-Hannifin Corporation PH is slated to report fourth-quarter fiscal 2020 (ended June 2020) results on Aug 6, before market open.
The company pulled off an earnings surprise of 12.95%, on average, in the last four quarters, beating estimates all through. Parker-Hannifin’s third-quarter fiscal 2020 (ended March 2020) adjusted earnings of $2.92 per share outpaced the Zacks Consensus Estimate of $2.26 by 29.2%.
In the past three months, the company’s shares have gained 16.1% compared with 19.7% growth recorded by the industry it belongs to.
Factors at Play
Parker-Hannifin is expected to have benefited from strength in its power, semiconductor, marine and mining end-markets. Also, benefits of the company’s unique Win Strategy and growth-based investments are expected to get reflected in its results.
Moreover, the company’s buyout of LORD Corporation (completed in October 2019), which has been enhancing its engineered materials’ product and solutions offerings, is expected to have boosted its revenues. In addition, the acquired Exotic Metals Forming business (completed in September 2019), which augments the company’s aerospace products and solutions with unique products and proprietary manufacturing capabilities, is anticipated to have supported its top-line performance in the fiscal fourth quarter.
Further, some of the cost-control actions taken by the company, including the reduction of discretionary expenses, a hiring freeze and reduction of capital expenditure, are expected to have helped it maintain a healthy margin performance.
However, challenged end-market conditions amid the coronavirus pandemic, particularly at aerospace, and oil and gas space, are likely to have adversely impacted its top-line performance in the to-be-reported quarter. Notably, the duration of the crisis and the impacts of the governmental regulations imposed in response to the crisis are anticipated to have a bearing on the company’s results.
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 to-be-reported quarter.
Notably, the Zacks Consensus Estimate for fourth-quarter fiscal 2020 revenues for the Aerospace segment is pegged at $550 million, indicating a decline of 18.9% from the year-ago quarter’s reported number. The consensus estimate for revenues for the North America operations of the Diversified Industrial segment stands at $1,355 million, indicating a 22.3% decline from the year-ago quarter reported figure. The consensus mark of $975 million for International operations of the Diversified Industrial segment indicates a year-over-year decline of 22.5%.
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 +8.53% as the Most Accurate Estimate is pegged at $1.59, higher than the Zacks Consensus Estimate of $1.47.
ParkerHannifin Corporation Price and EPS Surprise
ParkerHannifin Corporation price-eps-surprise | ParkerHannifin Corporation Quote
Zacks Rank: Parker-Hannifin carries a Zacks Rank #3, which when combined with a positive ESP, makes us confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Ranks #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Other Key Picks
Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:
Graphic Packaging Holding Company GPK presently has an Earnings ESP of +1.66% and it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
IIVI Incorporated IIVI currently has an Earnings ESP of +4.56% and it flaunts a Zacks Rank #1.
Cintas Corporation CTAS has an Earnings ESP of +2.02% and a Zacks Rank of 2 at present.
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