August 03, 2011 at 09:30 AM EDT
The Zacks Analyst Blog Highlights: Parker Hannifin, Marathon Oil, Marathon Petroleum, Standard Motor Products and Visteon

CHICAGO, Aug. 3, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Parker Hannifin Corporation (NYSE: PH), Marathon Oil Corporation (NYSE: MRO), Marathon Petroleum Corporation (NYSE: MPC), Standard Motor Products Inc. (NYSE: SMP) and Visteon Corporation (NYSE: VC).

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Here are highlights from Tuesday's Analyst Blog:

Parker-Hannifin: Record Earnings

Parker Hannifin Corporation (NYSE: PH) released its fourth-quarter fiscal 2011 earnings result before the market opened today, reporting earnings per share of $1.79, slightly below the Zacks Consensus Estimate of $1.80 and above prior-year earnings of $1.35.

For full-year fiscal 2011, earnings per share of $6.37, were in line with the Zacks Consensus Estimate. The company achieved record earnings results during the year and also record sales and earnings for the quarter.

Total Revenue

The company's sales in the reported quarter increased by 22.4% year over year to $3.4 billion. Sales for the quarter included a 1% contribution from acquisition and 6% from currency effects. Total orders in the quarter increased by 15%.

Outlook

Parker Hannifin expects fiscal 2012 earnings per share to be in the range of $6.70 to $7.50. The company continues to focus on implementation of Win Strategy, a prime benefactor for Parker. The company aims on providing leading services to its customers, new product developments and system innovations. Acquisitions are also a target for the company for growth.  

We believe Parker Hannifin is a high-quality company that is showing good execution. The company is witnessing a recovery in aerospace demand, which positively favors its future growth. MRO (Maintenance, Repair, and Overhaul) is expected to get a boost from continued deferral of capital investment in new machines. Parker Hannifin's strong exposure to MRO-type products and ability to convert net income into free cash flow will benefit future earnings.

However, the company's domestic and foreign operations are subject to significant competitive pressures. To compete successfully, the company's Industrial and Climate & Industrial Controls must excel in terms of product quality and innovation, customer service, manufacturing and distribution capability and price competitiveness.

New-Look Marathon Misses, Profits Up

Oil and natural gas exploration and production firm Marathon Oil Corporation (NYSE: MRO) reported weaker-than-expected second quarter 2011 results, as unplanned disruptions hurt production.

Houston, Texas-based Marathon – which recently spun off its refining/sales business into a separate, independent and publicly traded company Marathon Petroleum Corporation (NYSE: MPC) – announced earnings from continuing operations (excluding special items) of 96 cents per share, below the Zacks Consensus estimate of 99 cents per share. The now-separated downstream unit has been treated as discontinued operations.  

However, compared with the year-ago period, Marathon's adjusted earnings per share from continuing operations improved 54.8% (from 62 cents to 96 cents), while revenues were up 33.1% to $3,865.0 million, reflecting higher commodity prices.

Guidance

Marathon estimates third quarter 2011 E&P production available for sale in the range of 330,000 – 350,000 BOE/d, excluding the effect of any future acquisitions or disposals. For the full year, volumes are expected to range between 350 and 360 BOE/d.

Rating

Marathon shares currently retain a Zacks #5 Rank, which translates into a short-term Strong Sell rating.

Standard Motor Beats Estimate

Standard Motor Products Inc. (NYSE: SMP) reported earnings of $13.7 million or 59 cents per share substantially improving from $8.1 million or 35 cents per share in the second quarter of 2010.

Reported income in the quarter included a post-retirement curtailment gain of $2.19 million or 9 cents per share and another gain of $157,000 or 1 cent per share from sale of assets whereas, the last year quarter included a gain of $125,000 or 1 cent per share from sale of assets along with restructuring and integration expenses of $774,000 or 4 cents per share.

Excluding these items, adjusted earnings of the company stood at $11.4 million or 49 cents per share compared with $8.7 million or 38 cents per share in the year-ago quarter. Earnings per share also exceeded the Zacks Consensus Estimate of 45 cents per share.

Consolidated net sales in the quarter grew 5.6% to $244.0 million from $231.0 million in the corresponding quarter of 2010. Both the business segments saw modest improvements in sales. The company recently strengthened its Engine Management product line by utilizing BLD Products' wide product portfolio.

The company had a gross profit of $63.2 million compared with a gross profit of $58.4 million in the comparable quarter of 2010. The improvement was primarily driven by the company's efficient cost management efforts, such as relocating to low cost manufacturing sites, purchasing product from low cost areas and lower overheads.

Revenues from the Temperature Control segment amounted to $79.7 million, up 7.8% from last year's $73.9 million. Gross profit from the segment totaled $19.6 million up 10.7% year over year.

On the other hand, revenues in the Engine Management segment escalated 4.6% to $159.9 million. Gross profit in the segment also climbed up 6.7% to $40 million in the second quarter of 2011.

Standard Motor's cash balance improved slightly to $13.1 million as of June 30, 2011 from $12.1 million as of December 31, 2010. Long-term debt was reported at $258,000 at the end of the second quarter of 2011 versus $307,000 as of December 31, 2010.

The Board of Directors also announced a payment a quarterly dividend of 7 cents on September 01, 2011 to its stockholders of record on August 15, 2011.

The Long Island City, New York-based Standard Motor is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. and enjoys a strong competitive advantage due to its brand recognition and customer base. Moreover, is not significantly exposed to the cyclicality of the automotive industry since it is focused on the aftermarket, where it is a leading niche market player.

However, high customer concentration, weak pricing in the Temperature Control segment and intensifying competition may hamper its growth in the coming years. The company's key competitors include Visteon Corporation (NYSE: VC).

Thus, the shares of Standard Motor are maintaining a Zacks #3 Rank, which translates into a short-term Hold rating.

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