Parker Hannifin (PH) AI Stock Analysis

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Parker Hannifin

(NYSE:PH)

76Outperform

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.

Earnings growth potential

PH’s Diversified Industrial business' ability to rapidly inflect with recovering demand and favorable Aero industry demand trends positions PH for accelerating earnings growth in FY26-27.

Operational strategy

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 and industrial risks

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

Growth outlook

Despite the positive order inflection, PH lowered its FY25 organic growth guide by (250)bps at the midpoint in Industrial NA and by (150)bps at the midpoint in Industrial International.

Valuation and sentiment

The stock is downgraded due to balanced valuation, potential downside risks, and extreme crowding.

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

Market Cap

$86.94B

Dividend Yield0.96%

Average Volume (3M)837.48K

Price to Earnings (P/E)26.2

Beta (1Y)1.28

Revenue Growth-0.23%

EPS Growth22.41%

CountryUS

Employees61,120

SectorIndustrials

Sector Strength91

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)6.94

Shares Outstanding127,778,010

10 Day Avg. Volume736,974

30 Day Avg. Volume837,482

Financial Highlights & Ratios

PEG Ratio3.33

Price to Book (P/B)5.76

Price to Sales (P/S)0.00

P/FCF Ratio26.48

Enterprise Value/Market Cap1.05

Enterprise Value/Revenue1.15

Enterprise Value/Gross Profit21.62

Enterprise Value/Ebitda4.64

Forecast

1Y Price Target

$712.75

Price Target Upside4.75% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering12

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
Shows how much each business unit contributes to total sales, indicating core strengths and diversification. This helps assess growth drivers and potential vulnerabilities.

Chart InsightsParker Hannifin's Aerospace Systems segment shows robust growth, with a significant year-over-year increase, driven by strong aftermarket demand in defense and commercial markets. This contrasts with the Diversified Industrial segment, which faces challenges, including a decline due to softness in transportation and energy markets. The latest earnings call highlights record margins and cash flow, but also notes a 2% sales decline and tariff impacts. Despite these challenges, Parker's strategic actions, like cost reductions and a dividend increase, reflect confidence in its financial resilience.

Data provided by:

Main Street Data

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.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
19.79B	19.93B	19.07B	15.86B	14.35B	13.70B
	Gross Profit
4.24B	7.13B	6.43B	4.47B	3.90B	3.41B
	EBIT
1.07B	3.68B	1.61B	1.87B	2.50B	1.82B
	EBITDA
4.67B	5.03B	4.07B	2.44B	3.09B	2.43B
	Net Income Common Stockholders
3.39B	2.84B	2.08B	1.32B	1.75B	1.20B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
415.45M	422.03M	483.57M	563.66M	772.23M	756.32M
	Total Assets
29.58B	29.30B	29.96B	25.94B	20.34B	19.74B
	Total Debt
11.37B	10.56B	12.56B	11.48B	6.58B	8.46B
	Net Debt
10.97B	10.14B	12.08B	10.94B	5.85B	7.78B
	Total Liabilities
17.98B	17.22B	19.63B	17.08B	11.93B	13.61B
	Stockholders Equity
11.59B	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 Price680.40

Price Trends

50DMA

605.29

Positive

100DMA

633.29

Positive

200DMA

629.34

Positive

Market Momentum

MACD

22.65

Negative

RSI

71.05

Negative

STOCH

87.66

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 680.4 is above the 20-day moving average (MA) of 620.88, above the 50-day MA of 605.29, and above the 200-day MA of 629.34, indicating a bullish trend. The MACD of 22.65 indicates Negative momentum. The RSI at 71.05 is Negative, neither overbought nor oversold. The STOCH value of 87.66 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 (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ETN	81 Outperform	$128.77B	33.22	20.84%	1.17%	7.00%	16.84%
ITW	78 Outperform	$73.64B	22.12	107.62%	2.35%	-1.85%	12.04%
ROP	78 Outperform	$62.67B	42.04	8.09%	0.54%	13.34%	1.98%
PH	76 Outperform	$86.94B	26.19	27.16%	0.96%	-0.23%	22.41%
EMR	73 Outperform	$67.84B	28.79	9.82%	1.75%	6.49%	24.14%
ROK	68 Neutral	$34.84B	38.91	25.86%	1.66%	-11.19%	-22.50%
Sector *	64 Neutral	$4.43B	12.01	5.16%	249.23%	4.03%	-11.73%

* Industrials Sector Average

Performance Comparison

Parker Hannifin

680.40

138.02

25.45%

ETN

Eaton

329.07

0.22

0.07%

EMR

Emerson Electric Company

120.61

8.91

7.98%

ITW

Illinois Tool Works

251.34

6.60

2.70%

ROK

Rockwell Automation

309.05

41.57

15.54%

ROP

Roper Technologies

582.88

39.65

7.30%

Parker Hannifin Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q3-2025)

% Change Since: 12.77%|

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.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.