Wednesday, October 24, 2012

PH Sell Thesis

On Friday October 19, 2012, Parker-Hannifin reported 2013 Q1 earnings, where we saw a decline in profit due to Sales being down and an increase in the costs. They reported EPS of $1.57, which missed analysts’ projects of 1.73, a miss of 9.24%, with revenue at $239.74 million. This is compared to last year’s first quarter when the company had an EPS of $1.91 with revenues of $297.02 million. This miss could be representing the beginning of a strong slow down for the company. This does not fall in line with our investment thesis for the company, where growth was expected to pick with the United States economy. Along with this, a rise in cost of goods sold has further squeezed the margins for a company that does not necessarily have room for much further decreases. Their international industrial segment declined by 8.9% year over year. This decline was much worse than the model or the market anticipated. These factors combine to create a situation where Parker-Hannifin was removed from the UASBIG portfolio.

-Matthew Buechele, Industrial Sector Head

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