PH changes
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- Price
- $956.59
- Discount category
- Far above intrinsic value
- Next earnings
- 2027-01-28
- Next earnings is estimate
- Yes
- Company name
- Parker-Hannifin
- Sector
- Industrial machinery
- About
- Parker-Hannifin makes motion and control technologies, such as hydraulics, pneumatics, filtration, seals, electric motor controls and aircraft systems. It has two segments: Diversified Industrial, with North America and International businesses, and Aerospace Systems. Sales were $21.5 billion in fiscal 2026 and $6.0 billion in Q1 fiscal 2027. Its fiscal year ends on June 30. It bought Curtis Instruments in September 2025 and Filtration Group in August 2026, and it has agreed to buy the aerospace business of CIRCOR International. It has increased its annual dividend for 70 consecutive fiscal years.
- Thesis
- Parker-Hannifin trades at a premium because investors pay for steady margin gains, a large aerospace business with aftermarket sales and a long record of acquisitions that raise earnings. The adjusted segment operating margin was a record 28.6% in Q1 fiscal 2027, and the company raised its target to 30% by fiscal 2031. Orders rose 13% over 12 months, and the backlog reached a record $13.7 billion. For the premium to be earned, three things must be true. Organic sales growth must stay inside or above the fiscal 2027 guidance of 7.5% to 10.5% as industrial markets recover. Filtration Group and, after it closes, CIRCOR Aerospace must add earnings and cost savings as planned. Free cash flow must reach the fiscal 2027 guidance of $3.5 billion to $4.0 billion and reduce the debt of about $17.5 billion that the Filtration Group purchase increased. The Q2 fiscal 2027 report, expected in late January 2027, gives the next test, and the CIRCOR Aerospace closing, expected in calendar 2026, gives another. The premium can shrink if industrial demand falls, if integration costs rise, or if the higher debt stops buybacks for longer than planned.
- Risks
- Debt rose to about $17.5 billion at September 30, 2026 from $8.5 billion at June 30, 2026 after the Filtration Group purchase, and the CIRCOR Aerospace purchase can add up to $2.0 billion more. Interest expense rose to $146 million in Q1 fiscal 2027 from $101 million a year earlier. Most sales come from industrial customers. Organic growth was 4.0% in EMEA and a fall of 1.3% in Latin America in Q1 fiscal 2027, and a downturn in industrial demand can lower sales and margins. Goodwill and intangible assets were $27.9 billion at September 30, 2026, after the Filtration Group purchase. If the acquired businesses earn less than planned, the company can record impairments. Aerospace Systems depends on aircraft build rates and air travel. Slower aircraft production or less flying can reduce original equipment and aftermarket sales. Tariffs change costs and prices. In Q1 fiscal 2027, the company returned $27 million of tariffs to customers after the U.S. Supreme Court ruling on IEEPA tariffs.
- Balance sheet
- Cash: $711M Debt: $17.5B Net debt: $16.8B Interest cover: 9.7× Undrawn credit line: $2.2B, to September 2031 Debt due within 12 months: $4.7B Parker-Hannifin funds itself with senior notes, term loans and commercial paper. Total debt was $17.48 billion at September 30, 2026, up from $8.52 billion at June 30, 2026, because of the Filtration Group purchase. Of this debt, $4.74 billion is due within one year, including $2.8 billion of commercial paper. Cash was $711 million. The $5.0 billion revolving credit agreement supports the commercial paper program, and $2.2 billion was available at September 30, 2026. The company can also draw a $2.0 billion term loan for CIRCOR Aerospace. Interest cover is income before interest expense and other items divided by interest expense for Q1 fiscal 2027 (a calculation from the release figures). The company expects free cash flow of $3.5 billion to $4.0 billion in fiscal 2027. It repurchased only $75 million of shares in Q1 fiscal 2027, compared with $475 million a year earlier. As of 2026-09-30.
- Checkpoints
- Nov 5, 2026: Q1 fiscal 2027 results: margins and orders. Passed. Watch: Organic growth, a higher adjusted margin and a confirmed or higher outlook pass; lower guidance or falling orders fail. Outcome: Organic sales rose 11.5%, the adjusted segment operating margin rose to 28.6% and the company raised its fiscal 2027 guidance. Dec 2026 (estimate): CIRCOR Aerospace closing. Pending. Watch: A closing in calendar 2026 on the agreed terms passes; a delay into 2027 or new conditions from regulators fail. Jan 28, 2027 (estimate): Q2 fiscal 2027 results: integration and debt. Pending. Watch: Organic growth inside the guidance, Filtration Group on plan and lower debt pass; a cut in guidance or rising debt fail.
- Recent events
- 2026-11-05: Parker-Hannifin reported Q1 fiscal 2027 results. Sales rose 18% to a record $6.0 billion, with organic growth of 11.5%. Adjusted EPS rose 23% to $8.90, and the adjusted segment operating margin rose to 28.6%. The backlog reached a record $13.7 billion. The company raised fiscal 2027 guidance, now with Filtration Group, to organic growth of 7.5% to 10.5%, adjusted EPS of $36.45 to $37.25 and free cash flow of $3.5 billion to $4.0 billion. 2026-09-14: Parker-Hannifin sold $2.4 billion of U.S. senior notes with rates of 4.75% to 5.30% and €2.025 billion of euro senior notes with rates of 3.80% to 4.375%. It used the money to repay the 364-day term loan for the Filtration Group purchase. 2026-09-10: Parker-Hannifin signed a three-year delayed draw term loan of up to $2.0 billion to fund part of the CIRCOR Aerospace purchase. On September 4, it also signed a new $5.0 billion revolving credit agreement that expires in September 2031. 2026-08-13: Parker-Hannifin completed the purchase of Filtration Group from Madison Industries for about $9.1 billion, net of cash. It borrowed $7.75 billion under two term loans to fund part of the price. 2026-08-06: Parker-Hannifin reported fiscal 2026 results. Sales rose 8.3% to a record $21.5 billion, adjusted EPS rose 18% to $32.31 and operating cash flow was a record $4.4 billion. It raised its adjusted segment operating margin target to 30% by fiscal 2031. 2026-05-21: Parker-Hannifin agreed to buy the commercial and defense aerospace business of CIRCOR International for about $2.55 billion in cash. The company expects the deal to close in calendar 2026. 2026-04-30: Parker-Hannifin reported Q3 fiscal 2026 results. Sales rose 11% to a record $5.5 billion, adjusted EPS rose 18% to $8.17 and orders rose 9%. It raised its fiscal 2026 outlook and its quarterly dividend by 11%. 2025-11-10: Parker-Hannifin agreed to buy Filtration Group for a cash price of $9.25 billion, to be funded with new debt and cash.