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

Zacks Equity Research

Parker-Hannifin Corporation PH is slated to report first-quarter fiscal 2020 (ended September 2019) results on Oct 31, before market open.

The company pulled off average positive earnings surprise of 7.44% in the last four quarters, beating estimates all through. Notably, Parker-Hannifin’s fourth-quarter fiscal 2019 (ended June 2019) adjusted earnings of $3.31 per share outpaced the Zacks Consensus Estimate of $3.09 by 7.12%.

In the past three months, the company’s shares have gained 7.7% compared with 0.7% growth recorded by the industry it belongs to.



Factors at Play

Parker-Hannifin is likely to have benefited from strength in original equipment manufacturer (OEM) and maintenance, repair and overhaul (MRO) businesses in both commercial and military end markets. Also, growth in commercial aftermarket is likely to have supported its Aerospace Systems segment's top-line performance. In addition, strength across end markets like forestry and life sciences, along with stability in power, telecom, material handling, construction and refrigeration end markets might have supplemented revenues in the fiscal first quarter.

Also, benefits from its unique Win Strategy and ongoing investments are expected to get reflected in the company's results. Moreover, Parker-Hannifin is likely to have gained from its ongoing business-realignment moves and increased synergy savings from the CLARCOR acquisition (March 2017). This is expected to get reflected its to-be-reported quarter results. 

However, integration costs associated with the buyout and business-realignment expenses might have dampened its profitability in the quarter. In addition, increasing liabilities are likely to have posed a concern for Parker-Hannifin. Notably, at the end of fiscal 2019 (ended June 2019), the company's long-term debt totaled about $6,520.8 million, up 51% on a year-over-year basis. Its profitability is expected to have been adversely impacted by high-debt levels in the to-be-reported quarter as well.

Amid this backdrop, the Zacks Consensus Estimate for first-quarter fiscal 2020 revenues for the Aerospace segment is pegged at $596 million, indicating growth of 5.7% from the year-ago quarter reported number. The Zacks Consensus Estimate for revenues for the North America operations of the Diversified Industrial segment is pegged at $1,606 million, indicating a 4.5% decline from the year-ago quarter reported figure.  The consensus mark of $1,113 million for International operations of the Diversified Industrial segment indicates a decline of 9.8%.

Earnings Whispers

According to our quantitative model a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat.

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

But that is not the case here.

Earnings ESP: Parker-Hannifin has an Earnings ESP of -0.01%.

Parker-Hannifin Corporation Price and EPS Surprise

Parker-Hannifin Corporation Price and EPS Surprise

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

Zacks Rank: Parker-Hannifin carries a Zacks Rank #3.

Key Picks

Here are some companies you may want to consider as our model shows that these have the right mix of elements to beat estimates this earnings season:

Plug Power, Inc. PLUG has an Earnings ESP of +58.33% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MRC Global Inc. MRC has an Earnings ESP of +31.96% and a Zacks Rank of 3.

Sealed Air Corporation SEE has an Earnings ESP of +2.40% and a Zacks Rank #3.

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