Parker Hannifin Is The Latest Industrial To Beat Earnings Estimates And Bolster Guidance

Parker Hannifin (NYSE:PH) reported earnings Tuesday morning. It joined industrial behemoths General Electric (NYSE:GE) and Honeywell (NYSE:HON) in reporting numbers that beat expectations. Industrials seem to be able so far to overcome weakness in Europe with stronger domestic demand as well as increased sales from fast growing Asia and South America.

Key highlights from Parker Hannifin's earnings report:

  • EPS increased 20% to a record $2.01 a share.
  • Revenues of $3.4B for the quarter beat estimates by over $100mm.
  • The company raised guidance for full year earnings.
  • Parker Hannifin also announced a 5% hike to its dividend payout.

4 additional reasons Parker Hannifin looks like a solid value at just over $80 a share:

  • The stock has a forward PE of under 10.5, which is a 30% discount to its historical average.
  • The consensus price target for the 12 analysts that follow the stock is $91 a share. Credit Suisse has an "Outperform" rating and a $94 price target on PH. S&P has a "Buy" rating and a $100 a share target on the stock.
  • The company has an A rated balance sheet, will now yield 2% and sells for around 9 times operating cash flow.
  • Return on invested capital came in at just under 16% in FY2011, a significant increase from under 11% in FY2009. It also did a great job in increasing margins over that time period.

Disclosure: I am long GE.