Parker Hannifin
PH
$965.17
+0.90%
Parker-Hannifin is a diversified industrial manufacturer that engineers motion and control technologies — hydraulic, pneumatic, electromechanical, climate control, and filtration components — sold into aerospace, agricultural and construction machinery, freight and passenger vehicles, and industrial automation end markets, with roughly 70% of segment revenue coming from its Diversified Industrial business and 30% from Aerospace Systems. Its competitive identity rests on a portfolio of small, mission-critical components that are designed to work together, driving high cross-selling rates and sticky aftermarket relationships that make it a premium-priced compounder rather than a commodity parts supplier. The current investor debate centers on the margin-expansion story following the transformational Meggitt acquisition, with the recently reported fiscal Q1 2027 revenue growth of 17.9% year over year and a 37.7% gross margin reinforcing the thesis that the portfolio is structurally more profitable than in prior cycles. Attention is also focused on capital deployment — the announced acquisition of CIRCOR's commercial and defense aerospace business and a large debt-funded transaction in the September quarter — which bulls view as accretive aerospace mix-shift and bears view as balance-sheet risk at a cyclical peak.…
PH
Parker Hannifin
$965.17
Related headlines
Investment Opinion: Should I buy PH Today?
Rating: Buy, with moderate conviction. The thesis is that Parker-Hannifin's post-Meggitt portfolio is structurally more profitable and faster-growing than the market is currently crediting, and that the 24.3% gap between the $917.79 price and the $1,140.41 average analyst target overstates the risk embedded in the debt-funded CIRCOR aerospace acquisition. The consensus is unambiguous — 19 Buy, 6 Hold, 1 Sell across 24 analysts, a recommendation mean of 1.69, and eight banks including Citigroup, JPMorgan and Bernstein reiterating Buy/Outperform through August-October 2026 with no downgrades — which is a strong signal that the Street views the 14.53% three-month decline as sentiment-driven rather than fundamental.
Four data points anchor the rating. First, revenue is accelerating, not decelerating: fiscal Q1 2027 revenue of $5.992 billion rose 17.86% year over year from $5.084 billion, with four consecutive sequential gains from $5.174B to $5.486B to $5.755B to $5.992B. Second, profitability remains top-quartile for industrial machinery at a 21.55% trailing operating margin, 16.97% net margin and 23.69% ROE, with gross margin of 37.73% in Q1 2027 actually above the prior-year 37.51% despite integration costs. Third, free cash flow of $3.855 billion against a payout ratio of just 25.7% and a 0.76% dividend yield gives management ample internal capacity to deleverage without sacrificing the dividend. Fourth, the gap between the 33.86x trailing PE and 22.56x forward PE implies roughly 50% EPS growth, consistent with consensus EPS of $49.91 versus the current run-rate — if delivered, the multiple normalizes quickly. The offset is that the stock is not cheap: 22.29x EV/EBITDA versus a sector norm of 12-14x, a PEG of 6.80, and price-to-sales of 5.75x all sit near the top of Parker's own multi-year range.
The three risks that could invalidate the thesis are, in order: margin compression from integration, with operating margin already down to 19.96% in Q1 2027 from 23.86% in Q4 2026 and interest expense up to $146 million from $95 million; a cyclical rollover in Diversified Industrial, which is roughly 70% of segment revenue and exposed to agricultural, construction and freight cycles; and multiple compression toward the historical 17-20x band if forward EPS growth disappoints. This Buy would upgrade to a high-conviction Buy on evidence of operating margin recovering above 22% alongside sequential debt reduction, and would downgrade to Hold if operating margin stays below 20% for two more quarters or if organic revenue growth (excluding M&A) turns negative. On valuation, the stock is fairly valued to modestly expensive relative to its own history and at a clear premium to peers — the case rests on quality and forward earnings growth, not on a discount.
Sign up to view all
PH 12-Month Price Forecast
The forward view is constructive but not aggressive: revenue momentum is real and accelerating, the analyst community is overwhelmingly positive with no recent downgrades, and the forward multiple of 22.56x is reasonable if the roughly 50% EPS growth embedded in consensus is delivered. The offsetting evidence is that the stock sits near the top of its multi-year valuation range on every metric — 22.29x EV/EBITDA versus a 12-14x sector norm, a PEG of 6.80, and price-to-sales of 5.75x — while operating margin has already compressed to 19.96% and interest expense has risen to $146 million, so the margin of safety is thin. The wide $740-$1,280 target dispersion, equal to 59% of the current price, is a fair reflection of genuine uncertainty about the earnings power of the post-acquisition entity rather than mere noise. I would upgrade to high confidence on evidence of operating margin recovering above 22% with sequential debt reduction, and would downgrade to neutral if margin stays below 20% for two more quarters or if organic growth excluding M&A turns negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Parker Hannifin's 12-month outlook, with a consensus price target around $1138.29 and implied upside of +17.9% versus the current price.
Average Target
$1138.29
25 analysts
Implied Upside
+17.9%
vs. current price
Analyst Count
25
covering this stock
Price Range
$740 - $1280
Analyst target range
Coverage is broad and overwhelmingly constructive: 24 analysts cover Parker with 19 Buy ratings, 6 Hold, and just 1 Sell, producing a consensus recommendation of "buy" and a recommendation mean of 1.69 (where 1.0 is a strong buy). The average target price of $1,140.41 implies roughly 24.3% upside from the current $917.79, a gap that is unusually wide for a mega-cap industrial and suggests the sell-side views the recent pullback as an overreaction rather than a fundamental deterioration. The consensus is clearly bullish, and the institutional ratings flow supports that stance — Citigroup, JP Morgan, Bernstein, Evercore ISI, KeyBanc, Truist, UBS, and BNP Paribas all reiterated Buy/Outperform/Overweight ratings through August and October 2026, with TD Cowen the notable Hold. The target range is extremely wide, from a low of $740 to a high of $1,280 — a spread of $540, or 59% of the current price — which signals genuine disagreement about the earnings power of the post-acquisition entity. The high target of $1,280 (about 39.5% above the current price) likely assumes successful deleveraging, aerospace aftermarket acceleration, and multiple expansion back toward the August highs, while the low target of $740 (about 19.4% below current) appears to price in margin compression from integration costs, a cyclical industrial slowdown, and leverage-driven multiple contraction. The absence of any downgrades in the recent ratings history, combined with consensus EPS estimates of $49.91 (range $47.65-$51.13) and revenue estimates of $29.59 billion, indicates the Street is holding its line on fundamentals despite the price weakness — but the wide dispersion and the stock's 14.5% three-month decline argue for treating the average target as an aspirational ceiling rather than a near-term forecast.
Bulls vs Bears: PH Investment Factors
The bull case currently rests on stronger near-term evidence: revenue is accelerating at 17.86% year over year with four consecutive sequential gains, margins remain top-quartile at a 21.55% trailing operating level, free cash flow of $3.855 billion is robust, and 19 of 24 analysts rate the stock Buy with a $1,140.41 average target implying 24.3% upside. The bear case is primarily a valuation and balance-sheet argument — at 33.86x trailing and 22.29x EV/EBITDA the stock is priced as a premium compounder near the top of its multi-year range, and the debt-funded acquisition has already lifted interest expense to $146 million and compressed operating margin to 19.96%. The single most important tension is whether the acquisition-driven aerospace mix shift and deleveraging can deliver the roughly 50% forward EPS growth embedded in the 22.56x forward multiple; if it does, today's price is reasonable, but if integration costs or a cyclical industrial slowdown interrupt that trajectory, the multiple has substantial room to compress toward its historical 17-20x band. On balance the evidence favors the bulls modestly, but the margin of safety is thin and the wide $740-$1,280 target dispersion is a fair reflection of the uncertainty.
Bullish
- Revenue accelerating with four straight sequential gains: Fiscal Q1 2027 revenue of $5.992 billion rose 17.86% year over year from $5.084 billion, and the sequential climb from $5.174B to $5.486B to $5.755B to $5.992B across four quarters shows broad-based momentum. Aerospace Systems contributed $1.867 billion of the total, and the CIRCOR aerospace deal adds further mix-shift toward higher-margin aftermarket revenue.
- Street consensus firmly bullish with 24% upside: Of 24 analysts, 19 rate Buy versus 6 Hold and 1 Sell, producing a recommendation mean of 1.69 and a consensus 'buy'. The average target of $1,140.41 implies 24.3% upside from $917.79, an unusually wide gap for a $117-124 billion mega-cap industrial, and eight banks including Citigroup, JPMorgan and Bernstein reiterated Buy/Outperform through August-October 2026 with no downgrades.
- Top-quartile profitability and returns on capital: Trailing operating margin of 21.55%, net margin of 16.97% and ROE of 23.69% are top-quartile for industrial machinery and reflect the structural Meggitt-driven mix improvement. Gross margin held at 37.73% in Q1 2027, above the prior-year 37.51%, even as integration costs and acquisition accounting weighed on operating income.
- Strong free cash flow and low payout burden: Trailing free cash flow is $3.855 billion against a payout ratio of just 25.7% and a 0.76% dividend yield, leaving substantial internal capacity to deleverage the acquisition-funded balance sheet. Debt-to-equity of 0.553 and a current ratio of 1.262 indicate leverage is elevated but manageable, not distressed.
Bearish
- Valuation at multi-year highs on every metric: PE has expanded from 17.66x in Q4 2023 and 20.32x in Q3 2025 to 33.86x today, while price-to-sales climbed from 9.83x to 20.11x and price-to-book from 4.85x to 8.02x. EV/EBITDA of 22.29x sits far above the sector norm of 12-14x, and a PEG of 6.80 shows the growth is expensive even on forward numbers.
- Debt-funded M&A is compressing margins: The September quarter saw $9.102 billion of acquisitions funded largely by $8.637 billion of net financing inflows, pushing interest expense to $146 million from $95 million a year earlier. Operating margin fell to 19.96% in Q1 2027 from 23.86% in Q4 2026 and 20.34% in the prior-year quarter, with SG&A rising to $1.065 billion.
- Sharp idiosyncratic underperformance: The stock is down 14.53% over three months versus SPY's -4.91%, a relative strength gap of -9.62 percentage points, and the October 22 earnings-related selloff from $958.22 to $893.21 in a single session shows how quickly sentiment can turn. At $917.79 the stock sits at only 38.0% of its 52-week range of $806.22-$1,099.94.
- Wide analyst dispersion signals real disagreement: Targets range from $740 to $1,280, a $540 spread equal to 59% of the current price, which reflects genuine uncertainty about the earnings power of the post-acquisition entity. The low target of $740 implies 19.4% downside and appears to price in margin compression from integration and a cyclical industrial slowdown.
PH Technical Analysis
Parker-Hannifin is in a choppy, range-bound consolidation rather than a clean trend: the stock is up 10.03% over the past year but sits at $917.79, which is only about 38.0% of its 52-week range of $806.22 to $1,099.94, meaning it is trading in the lower-middle of that band despite a positive annual return. That positioning reflects a stock that ran hard into an August peak near $1,073.87 and has since given back a meaningful portion of those gains, leaving it neither at momentum-driven highs nor at capitulation lows. With a beta of 1.145, the stock carries roughly 15% more volatility than the market, so this mid-range positioning should be treated as a neutral-to-cautious setup rather than a high-conviction entry. Recent momentum is clearly negative and diverging from the longer-term trend: the stock is down 3.67% over the past month and down 14.53% over three months, a sharp deceleration against the +10.03% one-year and +4.43% six-month returns. The three-month relative strength versus SPY is -9.62 percentage points, far worse than SPY's own -4.91% three-month move, indicating idiosyncratic underperformance rather than mere market beta — likely tied to the October 22 earnings-related selloff from $958.22 to $893.21 in a single session. The one-month relative strength of +1.32 versus SPY's -4.99% shows the stock is now stabilizing and outperforming a weak tape, suggesting the worst of the de-rating may be behind it, though the bounce from the $880.57 October 23 low to $917.79 remains unconfirmed. Key levels are well defined: support sits at the 52-week low of $806.22, roughly 12.2% below the current price, with an intermediate shelf around $880-$893 established by the October lows, while resistance is the 52-week high of $1,099.94, about 19.8% above current levels, with the $1,000-$1,070 August congestion zone as the first real hurdle. A breakout above $1,000 would signal the market has digested the acquisition-related leverage concerns and re-embraced the margin story, whereas a breakdown below $880 would confirm a lower-highs downtrend and open the path toward the $806 low; the maximum drawdown of -19.52% over the period shows this stock can deliver near-bear-market declines even in an uptrend, which argues for disciplined position sizing given the 1.145 beta.
Beta
1.15
1.15x market volatility
Max Drawdown
-19.5%
Largest decline past year
52-Week Range
$806-$1100
Price range past year
Annual Return
+14.8%
Cumulative gain past year
| Period | PH Return | S&P 500 |
|---|---|---|
| 1m | +0.3% | -3.7% |
| 3m | -9.8% | -2.9% |
| 6m | +9.6% | +0.2% |
| 1y | +14.8% | +10.1% |
| ytd | +8.0% | +10.0% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
PH Fundamental Analysis
Revenue is growing at a healthy clip and, importantly, accelerating: fiscal Q1 2027 (quarter ended September 30, 2026) revenue came in at $5.992 billion, up 17.86% year over year versus $5.084 billion in the prior-year quarter, and the sequential progression from $5.174 billion (Q2 2026) to $5.486 billion (Q3) to $5.755 billion (Q4) to $5.992 billion shows four consecutive quarters of sequential expansion. The segment mix explains the trajectory — Diversified Industrial contributed $4.152 billion and Aerospace Systems $1.867 billion, with aerospace strength and acquisition contributions (including the CIRCOR aerospace deal) driving the double-digit growth while the larger industrial base grows more modestly. This growth profile supports the bull case that Parker is a share-gainer in secularly growing aerospace and automation markets, though the 17.9% headline rate is flattered by M&A and investors should watch organic growth closely as the industrial cycle matures. Profitability is robust but showing some quarter-to-quarter noise: Q1 2027 net income was $884 million on a 37.73% gross margin and 14.75% net margin, down from Q4 2026's $1.091 billion net income and 39.04% gross margin, though still above the prior-year Q1's $808 million and 37.51% gross margin. Operating margin compressed to 19.96% in Q1 2027 from 23.86% in Q4 2026 and 20.34% in the prior-year Q1, with SG&A rising to $1.065 billion and interest expense jumping to $146 million from $95 million — a direct consequence of the debt-funded acquisition. The trailing operating margin of 21.55% and net margin of 16.97% remain strong for an industrial machinery company and reflect the structural improvement from the Meggitt integration, but the recent compression bears watching as a signal that integration costs and higher leverage are taking a toll. The balance sheet is levered but manageable: debt-to-equity stands at 0.553, the current ratio is 1.262, and trailing free cash flow is $3.855 billion, though the most recent quarter saw FCF of just $643 million against $752 million of operating cash flow after $109 million of capex and a $497 million working-capital drag. The September quarter's cash flow statement reveals the strategic pivot — $9.102 billion of acquisitions funded by $8.637 billion of net financing inflows and $9.006 billion of debt repayment activity — which explains the elevated leverage and interest burden; ROE of 23.69% and ROA of 8.56% confirm the business generates strong returns on capital, and with a payout ratio of just 25.7% and a 0.76% dividend yield, Parker retains ample internal funding capacity, though the near-term priority will be deleveraging rather than buybacks.
Quarterly Revenue
$6.0B
2026-09
Revenue YoY Growth
+17.9%
YoY Comparison
Gross Margin
37.7%
Latest Quarter
Free Cash Flow
$3.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is PH Overvalued?
Because Parker is solidly profitable — trailing net income is positive and the trailing PE is 33.86x — the PE ratio is the appropriate primary metric, and the gap between the trailing 33.86x and forward 22.56x is the key signal: the market expects earnings to grow roughly 50% over the next twelve months, consistent with consensus EPS of $49.91 versus the current run-rate, implying investors are paying up today for acquisition-driven and organic earnings expansion tomorrow. The PEG ratio of 6.80, however, warns that even on forward numbers the growth is not cheap relative to the multiple, and the EV/EBITDA of 22.29x and price-to-cash-flow of 28.31x both sit at levels that leave little room for execution error. Against the industrial machinery sector, Parker screens at a clear premium: its trailing PE of 33.86x and forward PE of 22.56x compare to a sector that typically trades in the high-teens to low-20s, and its price-to-sales of 5.75x and price-to-book of 8.02x are well above what a mid-cycle industrial conglomerate usually commands. The premium is defensible on quality grounds — a 21.55% operating margin, 16.97% net margin, and 23.69% ROE are top-quartile for the industry and reflect the high-margin aerospace mix and aftermarket annuity — but the 22.29x EV/EBITDA versus a sector norm closer to 12-14x means Parker is priced as a premium compounder, not a cyclical, and any growth stumble would compress that multiple sharply. Historically, Parker's own valuation band has expanded dramatically: the PE ratio was 17.66x in Q4 2023 and 20.32x in Q3 2025, versus 33.86x today, while price-to-sales has climbed from 9.83x in Q4 2023 to 20.11x in the most recent quarter and price-to-book from 4.85x to 8.02x. The stock is therefore near the top of its multi-year valuation range on every metric, which means the market is pricing in sustained double-digit growth and successful integration of recent acquisitions; this is a momentum-and-quality premium rather than a value entry point, and the 14.5% three-month drawdown has only partially normalized the multiple from its August extremes.
PE
33.9x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 18x~34x
vs. Industry Avg
30.2x
Industry PE ~30.2x*
EV/EBITDA
22.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on the balance sheet and margin trajectory following the September quarter's $9.102 billion of acquisitions, funded by $8.637 billion of net financing inflows. Interest expense jumped to $146 million in Q1 2027 from $95 million a year earlier, and operating margin compressed to 19.96% from 23.86% in Q4 2026 and 20.34% in the prior-year quarter, with SG&A rising to $1.065 billion. Quarterly free cash flow fell to $643 million against $752 million of operating cash flow after a $497 million working-capital drag, so the deleveraging path depends on sustained cash generation. Revenue concentration adds another layer: roughly 70% of segment revenue comes from Diversified Industrial, which is exposed to agricultural, construction and freight cycles, while the 17.9% headline growth rate is flattered by M&A and may overstate organic momentum.
Market and competitive risks are dominated by valuation compression. At 33.86x trailing PE, 22.29x EV/EBITDA and 5.75x price-to-sales, Parker trades well above a sector that typically commands high-teens to low-20s PE and 12-14x EV/EBITDA, leaving little room for execution error. The stock's beta of 1.145 means it carries roughly 15% more volatility than the market, and its three-month relative strength of -9.62 percentage points versus SPY shows the de-rating is idiosyncratic rather than purely macro. The CIRCOR aerospace acquisition is strategically sound but invites integration risk and competitive response in aerospace aftermarket, and the wide $740-$1,280 analyst target range signals that the Street itself is unsure how much multiple the post-acquisition entity deserves.
The worst-case scenario is a chain in which integration costs and higher interest expense keep operating margin near 20%, industrial end markets roll over into a cyclical slowdown, and the forward EPS growth implied by the 22.56x forward multiple fails to materialize — prompting multiple compression toward the historical 17-20x band and analyst downgrades. In that scenario the stock could retest its 52-week low of $806.22, roughly 12.2% below the current $917.79, and the analyst low target of $740 would represent about 19.4% downside. The observed maximum drawdown of -19.52% over the past period confirms that declines of this magnitude are realistic for this name, so investors should size positions accordingly given the 1.145 beta.
FAQ
The most severe risk is margin and balance-sheet pressure from debt-funded M&A: the September quarter saw $9.102 billion of acquisitions funded by $8.637 billion of net financing inflows, interest expense rose to $146 million from $95 million, and operating margin fell to 19.96% from 23.86% in Q4 2026. Second is valuation compression — at 22.29x EV/EBITDA versus a 12-14x sector norm and a 6.80 PEG, the stock has little cushion if forward EPS growth disappoints, with the historical 17-20x band implying meaningful downside. Third is cyclical exposure, since roughly 70% of segment revenue comes from Diversified Industrial, which is tied to agricultural, construction and freight cycles that are growing more modestly than aerospace. Fourth is company-specific execution and sentiment risk, evidenced by the October 22 single-session drop from $958.22 to $893.21 and a three-month relative strength of -9.62 percentage points versus SPY, amplified by a 1.145 beta and a -19.52% observed maximum drawdown.
The 12-month outlook is split into three scenarios. The base case carries 55% probability with a $1,000-$1,140 target range, assuming consensus EPS near $49.91 on roughly $29.59 billion of revenue, operating margin stabilizing at 20-22%, and the multiple holding near 20-22x forward earnings. The bull case at 25% probability targets $1,140-$1,280, requiring margin recovery above 22%, sequential debt reduction from $3.9 billion of annual free cash flow, and aerospace aftermarket acceleration. The bear case at 20% probability targets $740-$806, driven by margin staying below 20%, a cyclical industrial rollover, and multiple compression toward the 17-20x band. The base case is most likely because it is consistent with the 19-Buy consensus and the absence of any downgrades despite the 14.53% three-month decline, with the key assumption being that integration costs prove transitory.
On most measures Parker screens as fairly valued to modestly expensive relative to its own history and clearly premium-priced versus peers. The trailing PE of 33.86x compares with 17.66x in Q4 2023 and 20.32x in Q3 2025, while price-to-sales has climbed from 9.83x to 20.11x and price-to-book from 4.85x to 8.02x, placing the stock near the top of its multi-year range. The forward PE of 22.56x is more defensible because it implies roughly 50% EPS growth to the $49.91 consensus, but a PEG of 6.80 and EV/EBITDA of 22.29x against a 12-14x sector norm show the market is paying a quality premium rather than a discount. What the valuation implies is that investors expect successful CIRCOR integration, margin recovery above 22%, and sustained double-digit growth — any interruption to that path would likely compress the multiple toward the historical 17-20x band.
From a risk/reward standpoint the setup is moderately attractive but not compelling at $917.79. The upside case is anchored by the $1,140.41 average analyst target, roughly 24.3% above the current price, backed by 19 Buy ratings out of 24 analysts and a recommendation mean of 1.69, plus revenue growth of 17.86% year over year and free cash flow of $3.855 billion. The downside is equally concrete: the stock trades at 33.86x trailing earnings and 22.29x EV/EBITDA versus a 12-14x sector norm, operating margin has compressed to 19.96%, and the analyst low target of $740 implies about 19.4% downside, with the 52-week low of $806.22 only 12.2% below. It is a reasonable buy for investors with a multi-year horizon who can tolerate a 1.145 beta and a possible retest of the $880-$806 support zone, but the thin margin of safety argues for scaling in rather than buying a full position at once.
Parker is better suited to a long-term holding period of at least two to three years than to short-term trading. The company is a mature but still-growing industrial compounder with a 1964 listing history, 59,850 employees, and a business model built on sticky, cross-sold mission-critical components, which supports multi-year earnings visibility but offers limited near-term catalysts beyond quarterly integration updates. The 0.76% dividend yield and 25.7% payout ratio mean income is not a reason to own it, and the 1.145 beta combined with a -19.52% maximum drawdown and a 14.53% three-month decline make short-term positioning highly sensitive to sentiment swings like the October 22 selloff. The wide $740-$1,280 analyst target range, equal to 59% of the current price, further argues that the thesis needs time to resolve as the CIRCOR integration and deleveraging play out. A minimum holding period of 24 months is reasonable, with position sizing that accounts for a potential 12-19% drawdown to the $806-$740 support zone.