On August 6, Parker-Hannifin (NYSE:PH) missed earnings by 4.3%, its second consecutive quarter of missing analyst expectations. However, here at The Motley Fool, we know that the key to wealth creation is to think long term, and when one analyzes the actual result, it is obvious that the company is doing well. 

The numbers
Parker-Hannifin's fiscal year runs from June to June, and for its fourth quarter, the company reported earnings of $1.98/share, below the $2.07 analysts were expecting. However, when adjusted for restructuring costs, earnings were actually $2.06/share, up 15.7% year over year.

Revenue was up 3% to $3.53 billion, missing analyst sales projections by an insignificant 1.2%. Revenue growth was fueled by a 4% increase in orders, which makes four consecutive quarters of order growth for the company. 

For the entire fiscal year, Parker-Hannifin reported a record $13.2 billion in revenue, which represents 1.5% growth over fiscal 2013. However, earnings growth was a more impressive 9.7%, to $6.87/share, compared to 2013's $6.26/share. 

A key metric management likes to focus on is operational cash flows, which adjusted for a $75 million contribution to the company's pension program, at 11.1% of revenue. This marks the 13th consecutive year of double digit operating cash flows.

This quarter, management raised the dividend by 6.7%, to $0.48/share. This marks the 58th consecutive fiscal year of dividend growth, which puts Parker-Hannifin among the top five longest dividend growth streaks in the S&P 500 and makes the company a dividend aristocrat (25+ years of consecutive dividend growth).

Digging deeper
Parker-Hannifin has three operating segments: industrial North America, Industrial International, and Aerospace. 

Industrial North America reported a 4% increase in sales, to $1.53 billion. This resulted in a 7.6% increase in operating income, fueled by a 6% increase in orders. 

Industrial International saw 3.1% revenue growth to $1.38 billion, however, because of restructuring charges (which will be discussed later), operating income declined 15.1% despite a 4% increase in orders. 

Aerospace saw flat sales of $617 million, despite a 17% increase in orders. This was due to a negative impact of the company's joint venture with General Electric Company (NYSE:GE). However, operating income for the segment still grew 21.8%.

According to President and CEO Don Washkewicz, "Fiscal 2014 was a transitional year as we worked through the most significant restructuring in our history." 

Specifically, the company is writing down assets that "will fail to meet our future performance goals."

In 2014, these restructuring expenses totaled a $0.49/share hit to earnings and cost $104 million, slightly higher than management's previous projection of $100 million. 

Management is expecting the restructuring, which is scheduled to continue into fiscal 2015, will result in an additional $0.25/share earnings hit next year, but it will make the company better suited for continued long-term growth.

In addition, Parker-Hannifin has a joint venture with General Electric's Aviation division, called Advanced Atomization Technologies, LLC. This partnership makes fuel nozzles for current and future GE jet engines at Parker's Gas Turbine Fuel Systems Division facility in Clyde, New York.

The joint venture has proven itself a valuable asset, resulting in earnings gains in each of this year's quarters, save for this one.

What to watch going forward
For fiscal 2015, management expects earnings to rise by 2%-13.5% to $7/share to $7.80/share. Adjusted for restructuring earnings growth is projected to be 5.5% to 17.2%. 

Company Yield 21 Year Historic Annual Total Return (includes dividend reinvestment) Projected 5 Year Earnings Growth Rate Projected 5 Year Dividend Growth Rate
Parker-Hannifin 1.70% 13.10% 10.30% 13.35%
General Electric 3.50% 8.70% 7.60% 7.95%
Honeywell 2% 11.20% 10.63% 7.93%
Eaton 2.90% 12% 11.12% 12.04%
Emerson Electric 2.70% 10.20% 9.28% 8.95%
3M 2.40% 11.80% 11.97% 9.52%
S&P 500 1.89% 9.60% 12.54% 5.05%

Sources: Multpl.com, Yahoo Finance, Fast Graphs

As this table illustrates, not only has Parker-Hannifin substantially beaten its competitors (and the market) over the previous two decades, but analysts expect Parker to continue doing well over the next five years, especially when it comes to dividend growth. However, to accomplish this, the company needs to focus on three areas.

First, it must finish its restructuring in a cost-effective manner (not over budget), to minimize the negative effects on its earnings, if it's to achieve the above growth targets. Second, it must continue to grow its aerospace and GE joint venture such that operating income doesn't shrink, as it did this quarter. Given the excellent results over the past three quarters, I believe this is achievable and likely. 

Finally, and most importantly to dividend growth investors, Parker-Hannifin must continue growing its dividend, but at a much faster rate than this year's 6.7% increase. Again, I believe this is likely given the fact that restructuring costs during this major transitional year were probably the cause of the lower-than-average dividend hike. As the restructuring winds down, I expect Parker will accelerate its dividend growth rate, a goal made easier by its highly conservative payout ratio of just 27%.

Takeaway
Despite it being a major restructuring year for Parker-Hannifin, the company continues to execute well. Revenues show consistent, although slow, growth, while earnings growth and operating cash flows (when adjusted for restructuring costs) are truly excellent. Given the company's successful track record of growing the business and dividend, as well as its market- and industry-leading total returns, I believe long-term analyst earnings and dividend growth predictions are reasonable. Given a long-term time horizon, I believe Parker-Hannifin is likely to be an excellent dividend growth investment.

Adam Galas has no position in any stocks mentioned. The Motley Fool recommends 3M and Emerson Electric. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.