Parker Hannifin (PH) AI Stock Analysis

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Parker Hannifin

(NYSE:PH)

Rating:76Outperform

Price Target:―

Parker Hannifin's stock score reflects its strong financial performance and effective management of operations in a challenging market. The company's strategic focus on high-margin aerospace and defense, coupled with resilient order trends, supports a positive outlook. However, technical indicators suggest cautious trading momentum, and valuation metrics point to a balanced investment case. Challenges in industrial segments and external factors like tariffs weigh on the score, but the overall fundamentals remain robust.

Positive Factors

Aerospace Performance

Parker’s aerospace business has been consistently outperforming other supplier peers the past several quarters and self-help/market share initiatives will insulate PH from a potential broader market deceleration.

Order Inflection

Orders inflected positively in the company’s NA Industrial business and accelerated in its International business, which ultimately took focus.

Strategic Initiatives

PH’s Win Strategy 3.0 is driving meaningful margin expansion opportunities and its flexible capital deployment strategy positions PH well for outsized earnings growth over time.

Negative Factors

Economic Risks

There is increasing risk of a US recession that could impair industrial demand, affecting Parker's Industrial business.

Growth Challenges

The organic growth for PH Industrial may prove difficult to achieve and serves as an offset to continued margin upside.

Valuation Concerns

Parker-Hannifin faces potential downward EPS revision risk and is trading at a relative valuation premium, which could be problematic.

Parker Hannifin (PH) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$86.06B

Dividend Yield1.07%

Average Volume (3M)574.19K

Price to Earnings (P/E)26.0

Beta (1Y)1.28

Revenue Growth-0.23%

EPS Growth22.41%

CountryUS

Employees61,120

SectorIndustrials

Sector Strength84

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)6.94

Shares Outstanding127,778,010

10 Day Avg. Volume584,978

30 Day Avg. Volume574,190

Financial Highlights & Ratios

PEG Ratio3.32

Price to Book (P/B)6.28

Price to Sales (P/S)0.00

P/FCF Ratio26.69

Enterprise Value/Market Cap1.07

Enterprise Value/Revenue1.16

Enterprise Value/Gross Profit12.74

Enterprise Value/Ebitda4.52

Forecast

1Y Price Target

$717.45

Price Target Upside6.52% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering14

Parker Hannifin Business Overview & Revenue Model

Company DescriptionParker-Hannifin Corporation manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments, Diversified Industrial and Aerospace Systems. The Company's Diversified Industrial segment offers sealing, shielding, thermal products and systems, adhesives, coatings, and noise vibration and harshness solutions; filters, systems, and diagnostics solutions to monitor and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors, which control, transmit, and contain fluid; control solutions for extreme corrosion resistance, temperatures, pressures, and precise flow; and hydraulic, pneumatic, and electromechanical components and systems for builders and users of mobile and industrial machinery and equipment. This segment sells its products to original equipment manufacturers (OEMs) and distributors who serve the replacement markets in manufacturing, packaging, processing, transportation, construction, refrigeration and air conditioning, agricultural, and military machinery and equipment industries. Its Aerospace Systems segment offers products for use in commercial and military airframe and engine programs, such as control actuation systems and components, engine build-up ducting, engine exhaust nozzles and assemblies, engine systems and components, fluid conveyance systems and components, fuel systems and components, fuel tank inerting systems, hydraulic systems and components, lubrication components, pilot controls, pneumatic control components, thermal management products, and wheels and brakes, as well as fluid metering, delivery, and atomization devices. This segment markets its products directly to OEMs and end users. It markets its products through direct-sales employees, independent distributors, and sales representatives. The company was founded in 1917 and is headquartered in Cleveland, Ohio.

How the Company Makes MoneyParker Hannifin makes money through the design, manufacturing, and sale of motion and control technologies and systems. The company's revenue streams are primarily derived from its two main segments: Diversified Industrial and Aerospace Systems. In the Diversified Industrial segment, Parker Hannifin generates sales by providing products like hydraulic systems, filtration systems, fluid connectors, and seals. The Aerospace Systems segment contributes to revenue through the production of control systems and components for commercial and military aircraft. The company also benefits from long-term contracts and partnerships with original equipment manufacturers (OEMs), as well as aftermarket services that provide maintenance and replacement parts for its products.

Parker Hannifin Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Provides insight into which business segments are generating the most sales, indicating the company's strategic focus and potential areas for expansion or retraction.

Chart InsightsParker Hannifin's Aerospace Systems segment is experiencing robust growth, driven by strong aftermarket demand in defense and commercial markets, with a 12% year-over-year increase. This contrasts with the Diversified Industrial segment, which faces challenges from softness in transportation and energy markets, contributing to a sales decline. Despite these hurdles, Parker's strategic focus on pricing and supply chain actions is mitigating tariff impacts, and the company remains confident, as evidenced by a 10% dividend increase and strong cash flow performance.

Data provided by:

Main Street Data

Parker Hannifin Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q3-2025)

% Change Since: 11.63%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong financial performance in margins and cash flow, driven by robust aerospace results and positive order trends. However, it also acknowledged challenges such as sales decline, industrial segment softness, and the impact of tariffs. While the company demonstrated resilience and strategic planning, the mix of positive and negative factors suggests a balanced outlook.

Q3-2025 Updates

Positive Updates

Record-Breaking Margins and Cash Flow

Achieved record adjusted segment operating margin of 26.3%, adjusted EBITDA margin of 27%, and year-to-date cash flow from operations of $2.3 billion.

Strong Aerospace Performance

Aerospace sales reached a record $1.6 billion, up 12% year-over-year, driven by aftermarket strength in both defense and commercial end markets. Aerospace orders continue to be positive at +14%.

Positive Order Trends

Overall order rates increased to 9%, with international orders up by 11% and North America orders remaining positive.

Increased Dividend and Share Repurchase

Board approved a 10% increase in quarterly dividend, extending the record of increasing annual dividends to 69 years. Completed $650 million in share repurchases for the quarter.

Negative Updates

Sales Decline

Sales were down 2% year-over-year, with a negative impact from previously announced divestitures and unfavorable currency.

Challenges in Industrial Segments

Organic growth for diversified North America and International was down 3%, with ongoing softness in transportation, off-highway, and energy markets.

Impact of Tariffs

Announced tariffs are approximately 3% of cost of goods sold, equating to $375 million on an annualized basis, requiring mitigation actions to offset the costs.

Lowered Growth Forecasts

Lowered growth forecasts for implant and industrial equipment, transportation, and energy due to prolonged delays in industrial recovery and lower oil prices.

Company Guidance

During Parker-Hannifin Corporation's Q3 2025 earnings call, the company provided updated financial guidance and highlighted its strong performance in a challenging environment. Key metrics included a record adjusted segment operating margin of 26.3% and a record adjusted EBITDA margin of 27%. The company's year-to-date cash flow from operations reached $2.3 billion, and order rates increased by 9%. Parker expects full-year organic growth of approximately 1%, with specific guidance for Aerospace and Defense organic growth raised to 12%. Despite a 2% decline in sales, the company achieved a 7% increase in adjusted EPS to $6.94. Parker emphasized its ability to mitigate the impact of announced tariffs, which are expected to be approximately 3% of cost of goods sold, through pricing, supply chain actions, and cost reductions. The company also increased its quarterly dividend by 10%, reflecting confidence in its cash flow generation capabilities.

Parker Hannifin Financial Statement Overview

Summary

Parker Hannifin exhibits strong financial health with robust profitability, consistent revenue growth, and significant cash flow generation. Despite the high total liabilities to total assets ratio indicating potential liquidity risks, the company is well-positioned for future growth.

Income Statement

Very Positive

Parker Hannifin's financial performance, as indicated by its income statement, shows strong profitability and revenue growth. The TTM Gross Profit Margin stands impressively at 21.43%, and the TTM Net Profit Margin is a robust 17.14%. Revenue has grown significantly over the years, with a recent TTM figure of $19.79 billion compared to $15.86 billion in 2022. However, EBIT margin has seen fluctuations, with the latest TTM at 5.41%, indicating potential cost pressures.

Balance Sheet

Positive

The company's balance sheet reflects a solid equity position with a Debt-to-Equity ratio of 0.65 in the latest TTM, suggesting manageable leverage. The Return on Equity (ROE) is notably strong at 23.43% for the TTM, indicating efficient use of shareholder funds. However, an area of caution is the high total liabilities to total assets ratio, which may signal potential liquidity risks if not managed carefully.

Cash Flow

Very Positive

Parker Hannifin demonstrates strong cash flow metrics with a TTM Operating Cash Flow of $3.55 billion and a Free Cash Flow of $3.13 billion, representing significant cash generation capabilities. The Free Cash Flow Growth Rate is positive, indicating healthy cash flow expansion. The Operating Cash Flow to Net Income ratio of 1.04 in the TTM underscores strong cash earnings quality.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	19.79B	19.93B	19.07B	15.86B	14.35B	13.70B
Gross Profit	7.25B	7.16B	6.43B	5.31B	3.90B	3.46B
EBITDA	5.34B	5.03B	4.07B	2.44B	3.09B	2.36B
Net Income	3.39B	2.84B	2.08B	1.32B	1.75B	1.20B
Balance Sheet
Total Assets	28.92B	29.30B	29.96B	25.94B	20.34B	19.74B
Cash, Cash Equivalents and Short-Term Investments	408.74M	422.03M	483.57M	563.66M	772.23M	756.32M
Total Debt	9.37B	10.56B	12.56B	11.48B	6.58B	8.46B
Total Liabilities	15.52B	17.22B	19.63B	17.08B	11.93B	13.61B
Stockholders Equity	13.39B	12.07B	10.33B	8.85B	8.40B	6.11B
Cash Flow
Free Cash Flow	3.13B	2.98B	2.60B	2.21B	2.37B	1.84B
Operating Cash Flow	3.55B	3.38B	2.98B	2.44B	2.58B	2.07B
Investing Cash Flow	240.38M	-298.59M	-8.18B	-418.84M	-13.00K	-5.02B
Financing Cash Flow	-3.79B	-3.11B	-971.04M	3.92B	-2.62B	449.31M

Parker Hannifin Technical Analysis

Technical Analysis Sentiment

Positive

Last Price673.51

Price Trends

50DMA

639.22

Positive

100DMA

636.99

Positive

200DMA

642.48

Positive

Market Momentum

MACD

5.07

Positive

RSI

59.37

Neutral

STOCH

80.39

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PH, the sentiment is Positive. The current price of 673.51 is above the 20-day moving average (MA) of 664.36, above the 50-day MA of 639.22, and above the 200-day MA of 642.48, indicating a bullish trend. The MACD of 5.07 indicates Positive momentum. The RSI at 59.37 is Neutral, neither overbought nor oversold. The STOCH value of 80.39 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PH.

Parker Hannifin Risk Analysis

Parker Hannifin disclosed 21 risk factors in its most recent earnings report. Parker Hannifin reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Parker Hannifin Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ETN	80 Outperform	$134.32B	33.61	20.84%	1.21%	7.00%	16.84%
ITW	77 Outperform	$71.55B	21.49	107.62%	2.44%	-1.85%	12.04%
ROP	77 Outperform	$60.95B	41.19	8.09%	0.58%	13.34%	1.98%
PH	76 Outperform	$86.06B	25.99	27.16%	1.07%	-0.23%	22.41%
EMR	73 Outperform	$72.81B	31.20	9.82%	1.61%	6.49%	24.14%
ROK	68 Neutral	$36.35B	41.04	25.86%	1.61%	-11.19%	-22.50%
Sector *	62 Neutral	C$6.38B	7.49	3.30%	3.21%	6.91%	-13.05%

* Industrials Sector Average

Performance Comparison

Parker Hannifin

673.51

174.46

34.96%

ETN

Eaton

342.35

32.56

10.51%

EMR

Emerson Electric Company

129.44

23.06

21.68%

ITW

Illinois Tool Works

245.69

13.84

5.97%

ROK

Rockwell Automation

322.47

59.63

22.69%

ROP

Roper Technologies

566.94

8.11

1.45%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: May 03, 2025