Parker-Hannifin's (PH) stock got shot when it delivered earnings on April 28 despite beating consensus analyst expectations by 19% and earnings rising 82% over the previous year. The drubbing was, in large part, to CEO Donald Washkewicz's statements concerning the "drastic" ramp in commodity costs. Despite those costs having plummeted since April 28, Parker-Hannifin has continued its downward journey. A quick review of the CEO's comments along with the current price of those commodities indicates that the worries concerning input costs are abating, something that should make PH more attractive and profitable in the future.
"The biggest drivers have been oil, steel and copper. Copper, I think, is at around $4.50 a pound, if you can believe that."
Copper's current cost: $3.97.
"I think everybody's aware of oil, what's happening there. It's up to about $113, I believe, a barrel."
Oil's current cost: $98.
"When you talk about some of the metals, aluminum and copper and nickel and even plastics, are up quite a bit."
Aluminum price then $1.23, now $1.16. Nickel price then $12.20, now $11.16. Although PH was facing a drastic rise in commodity prices, those costs have now been drastically cut over the last 2 weeks, improving the company's ability to deliver strong earnings.