Thursday, August 16, 2012

Parker-Hannifin 4Q2012

     Parker-Hannifin reported 4Q2012 earnings on August 2, 2012. (The company has a fiscal year that begins and ends on June 30) For the quarter, the company reported EPS of $1.96, against the consensus of $1.91, while sales amassed $3.4 billion, which were flat year over year, despite 4% headwind occurring due to foreign exchange. The company was able to accomplish a major goal of achieving 15.5% segment operation margins, which beat management’s previously stated goal of 15% for 2012. These projected margin increases were a major part of the UASBIG thesis and will continue to play a major role in the appreciation of the security. The company was able to report stronger results, specifically in relation to Aerospace and Climate & Industrial Controls, historically the worst segment, as they improved more than 2% and 3 % year over year respectively.

     The company introduced fiscal 2013 EPS guidance of $7.10-$7.90, while street consensus has come in at $7.89. This parker estimate has a midpoint of $7.50, which includes a $.35 pension headwind. The street remains positive in relation to management’s guidance due to Parker’s historical trend of being conservative in relation to giving guidance (Initial FY2012 guidance was $6.70-$7.50, while the true value was $7.50).

     New orders for 4Q were down 1% year over year due to particularly weak results out of the Industrial International Segment, which fell 9% due to very strong downward pressure in Europe, where the company does have some level of exposure. This fall was partially offset by Industrial North America, which increased by 4%, Climate & Industrial Controls which increased by 1% and Aerospace which saw orders increase by 7%. 

No comments: