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Parker-Hannifin (PH) Beats on Q3 Earnings, Ups Fiscal '23 View

Parker-Hannifin Corporation PH reported third-quarter fiscal 2023 (ended Mar 31, 2023) adjusted earnings (excluding $1.39 from non-recurring items) of $5.93 per share, beating the Zacks Consensus Estimate of $5.03. The bottom line jumped 23% year over year.

Total revenues of $5,061.7 million also outperformed the Zacks Consensus Estimate of $4,804.1 million. The top line jumped 24% year over year. Organic sales for the quarter increased 12% year over year. Orders were up 2% year over year.

Segmental Details

The Diversified Industrial segment’s revenues totaled $3,867.11 million, representing 73.4% of net revenues for the quarter under review. On a year-over-year basis, the segment’s revenues increased 12%.

Revenues generated in Diversified Industrial North America totaled $2,342.59 million, up 16.3% year over year. International revenues were $1,524.52 million, up 5.9% year over year. Orders for Diversified Industrial North America and Diversified Industrial International declined 4% year over year each.

Parker-Hannifin Corporation Price, Consensus and EPS Surprise

Parker-Hannifin Corporation Price, Consensus and EPS Surprise
Parker-Hannifin Corporation Price, Consensus and EPS Surprise

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

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The Aerospace Systems segment generated revenues of $1,194.56 million, which accounted for 23.6% of net revenues for the reported quarter. Sales jumped 88.9% year over year, thanks to the contribution from  Meggitt acquisition (September 2022). Orders for the Aerospace Systems unit increased 25% on a rolling 12-month average basis.

Margin Profile

For the reported quarter, Parker-Hannifin’s cost of sales rose 23.3% year over year to $3,340.76 million. Selling, general and administrative expenses increased 35.6% from the prior year to $868.39 million.

Adjusted total segment operating income increased 26.7% year over year to $1,175.03 million. Adjusted total segment operating margin increased 50 basis points year over year to 23.2%. Interest expenses for the quarter surged more than 100% year over year to $151.99 million.

Balance Sheet & Cash Flow

Exiting the fiscal third quarter, Parker-Hannifin had cash and cash equivalents of $534.83 million compared with $467.71 million in the year-ago period. Long-term debt was $11.41 billion compared with $6.23 billion at the end of the year-ago period.  

In the first nine months of fiscal 2023, PH generated net cash of $1.79 billion from operating activities compared with $1.55 billion at the end of the year-ago quarter. Capital spending totaled $272.6 million in the first nine months of fiscal 2023 compared with $158.86 million in the year-ago period.

In the first nine months of fiscal 2023, Parker-Hannifin paid out cash dividends of $513.23 million, up 28.9% from the year-ago period.

Fiscal 2023 Outlook Improved

Parker-Hannifin has raised its organic sales and adjusted earnings guidance for fiscal 2023. The company expects fiscal 2023 organic sales to increase approximately 10% compared with a rise of 6-8% anticipated earlier.

Adjusted earnings are estimated to be between $20.60 and $20.90 per share compared with $19.20-$19.70 estimated earlier. The Zacks Consensus Estimate for the same stands at $19.7.

Zacks Rank & Other Key Picks

Parker-Hannifin carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks within the broader Industrial Products sector are as follows:

Ingersoll Rand IR presently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 12.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

Ingersoll Rand has an estimated earnings growth rate of 7.6% for the current year. The stock has rallied 9.5% in the past six months.

Allegion ALLE presently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 12.5%, on average.

Allegion has an estimated earnings growth rate of 15.1% for the current year. The stock has gained approximately 2% in the past six months.

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Parker-Hannifin Corporation (PH) : Free Stock Analysis Report

Ingersoll Rand Inc. (IR) : Free Stock Analysis Report

Allegion PLC (ALLE) : Free Stock Analysis Report

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