Parker Hannifin Corporation (PH) is set to report fiscal fourth quarter 2013 results on Aug 6, 2013. The company posted a 0.60% positive surprise last quarter. Given, the continued weakness in international markets and the uncertain economic environment, we are cautious about its chances of earnings beat in this quarter. Let’s see how things are shaping up for this announcement.
Factors this Past Quarter
Parker was primarily affected by major cancellations and rescheduling of orders in the past quarter. Further, the company witnessed a decline in industrial sales (contributed 76.6% of revenues in fiscal 2012). The decline was attributable to recessionary conditions in Europe, moderating growth in Asia, negative currency translations and flat organic sales. In addition, orders also declined for the Industrial segment.
The company expects the sluggish trends to continue through the fourth quarter of fiscal 2013 and reiterated its fiscal 2013 guidance. Earnings are expected to be in the range of $6.15 to $6.75 per share.
Earnings Whispers?
Our proven model does not conclusively show that Parker is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Negative Zacks ESP:That is because the Most Accurate estimate stands at $1.91 while the Zacks Consensus Estimate is higher at $1.95. That is a difference of -2.05%.
Zacks Rank #3 (Hold): Parker’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.
Other Stocks to Consider
You may want to consider the following companies as our model shows they have the right combination of elements to post an earnings beat this quarter:
Legacy Reserves Lp(LGCY), Earnings ESP of 6.67% and Zacks Rank #1 (Strong Buy)
Clayton William Energy, Inc.(CWEI), Earnings ESP of 10.6% and Zacks Rank #1 (Strong Buy)
Carrizo Oil & Gas Inc. (CRZO), Earnings ESP of 3.64% and Zacks Rank #2 (Buy)
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