Parker-Hannifin Corporation (PH) reported second quarter fiscal 2015 adjusted earnings per share of $1.84, surpassing the Zacks Consensus Estimate of $1.55 by 18.7% and year-ago quarter earnings of $1.30 by 41.5%.
Results were driven by strong order growth across the segments. The company again raised its fiscal 2015 earnings guidance, reflecting robust quarterly improvements and impact of the share buyback program. Shares of Parker-Hannifin went up by 4.27% during the pre-market trading session.
Total revenue in quarter increased 1% year over year to $3,135.0 million and came above the Zacks Consensus Estimate of $3,129 million.
The company reported a 4% increase in orders in the reported quarter, reflecting the sixth consecutive quarter of order growth. Moreover, operating income for the quarter escalated 13.3% year over year to $430.2 million.
Segment Performance
Parker’s Industrial Sales segment comprises two sub-segments – Diversified Industrial and Aerospace.
Under the Diversified Industrial Segment North American second quarter fiscal 2015 sales increased 5% to $1,389.2 million and operating income also increased 13.1% year over year to $226.9 million in the quarter. Meanwhile, the segment reported a 4% year-over-year increase in orders.
However, International fiscal second quarter sales decreased 7% to $1,187.4 million, while operating income increased 1.7% year over year to $136.5 million. On the other hand, orders for the segment grew 1% year over year.
Revenues in the Aerospace Systems segment rose 11% year over year to $558.4 million with a healthy 9% increase in orders. Also, operating income increased 48.4% year over year to $66.8 million.
Liquidity
At the end of second-quarter fiscal 2015 (Dec 31, 2014), Parker-Hannifin’s cash and cash equivalents were $1,075.3 million, compared with $2,139.5 million at the end of Dec 31, 2013. The company’s long-term debt stood at $2,725.5 million at the end of the second quarter, compared to $1,507.0 million as of Dec 31, 2013.
Exiting the reported quarter, net cash from operating activities were $538.5 million, down from $540.1 million in the year-ago period.
Share Repurchases
In the second quarter fiscal 2015, the company concluded share repurchases of $817 million.
Fiscal 2015 Guidance Raised
Encouraged by the company’s performance in the second quarter, management raised its fiscal 2015 adjusted earnings guidance. Parker-Hannifin now expects adjusted earnings in the range of $7.90 to $8.30 per share (prior range being $7.45 to $8.05). The earnings guidance includes the adjustment of restructuring expenses of approximately 20 cents a share.
The Zacks Consensus Estimate for the same, which stands at $7.88, is within the guided range.
Our Take
Parker-Hannifin came up with strong quarterly earnings results again on the back of continued operational performance enhancement. Also, the guidance increase for the second time raises investor confidence in the stock. However, currency headwinds remain concerns.
Parker-Hannifin carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector worth considering include Graco Inc. (GGG), Graham Corp. (GHM) and Kadant Inc. (KAI). While Graham carries a Zacks Rank #1 (Strong Buy), Graco and Kadant sports a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment