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Parker-Hannifin (PH) Q2 Earnings & Revenues Beat Estimates

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Parker-Hannifin Corporation PH has reported better-than-expected second-quarter fiscal 2021 (ended Dec 31, 2020) earnings, with a beat of 32.3%. Also, its sales surpassed estimates by 5.9%.

The company’s adjusted earnings were $3.44 per share in the quarter, surpassing the Zacks Consensus Estimate of $2.60. Also, the bottom line improved 35.4% from the year-ago quarter’s $2.54 per share.

Revenue Details

In the quarter, the company’s net sales were $3,411.9 million, reflecting a 2.5% year-over-year decline. Orders were flat in the quarter on a year-over-year basis.

Notably, the company’s top line surpassed the Zacks Consensus Estimate of $3,222 million.

Parker-Hannifin reports revenues under two segments. A brief discussion on the quarterly results is provided below:

The Diversified Industrial segment’s revenues totaled $2,826.5 million, representing 82.8% of net revenues in the quarter under review. On a year-over-year basis, the segment’s revenues increased 2.3%.

The segment’s revenues generated in North America totaled $1,566.9 million, decreasing 3% year over year. The segment’s International revenues were $1,259.6 million, up 9.8%. Orders in the quarter increased 1% for Diversified Industrial North America and that for Diversified Industrial International increased 10%.

The Aerospace Systems segment generated revenues of $585.4 million, accounting for 17.2% of net revenues in the reported quarter. Sales fell 20.4% year over year. Orders in the quarter decreased 18%.

Margin Profile

In the reported quarter, the company’s cost of sales decreased 6.1% year over year to $2,519.5 million. It represented 73.8% of the quarter’s net sales versus 76.7% in the year-ago quarter. Selling, general and administrative expenses decreased 27.3% to $356.6 million. It represented 10.5% of net sales versus 14% in the year-ago quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter increased 9.8% year over year to $710.8 million. Adjusted EBITDA margin expanded 230 basis points to 20.8%. Interest expenses decreased 24% to $63 million.

Balance Sheet & Cash Flow

Exiting second quarter of fiscal 2021, Parker-Hannifin had cash and cash equivalents of $564.7 million, down 23.9% from $742.4 million recorded in the last reported quarter. Long-term debt was down 6.5% sequentially to $6,602.3 million.

In the first six months of fiscal 2021, the company generated net cash of $1,354 million from operating activities, reflecting growth of 63.9% from the year-ago period. Capital spending totaled $92.9 million compared with $118.6 million in the year-ago period.

In the first six months of fiscal 2021, the company paid out cash dividends of $227.2 million, relatively flat on a year-over-year basis.

Parker-Hannifin Corporation Price, Consensus and EPS Surprise

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

Parker-Hannifin Corporation price-consensus-eps-surprise-chart | Parker-Hannifin Corporation Quote

Outlook

Parker-Hannifin intends to boost near-term revenues and profitability on the back of its Win Strategy. For fiscal 2021 (ending June 2021), the company currently anticipates generating adjusted earnings of $13.65-$14.15 per share, higher than $11.70-$12.30 guided previously.

Zacks Rank & Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks are AGCO Corporation AGCO, AptarGroup, Inc. ATR and Dover Corporation DOV. While AGCO currently sports a Zacks Rank #1 (Strong Buy), AptarGroup and Dover carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO delivered a positive earnings surprise of 434.48%, on average, in the trailing four quarters.

AptarGroup delivered a positive earnings surprise of 10.91%, on average, in the trailing four quarters.

Dover delivered a positive earnings surprise of 20.01%, on average, in the trailing four quarters.

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