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Parker Hannifin (ISIN: US7010941042) is a global leader in motion and control technologies, providing solutions for industrial applications, mobile systems, and aerospace. Long-term megatrends such as automation, electrification, energy efficiency, and digitalization are benefiting the M&A-driven company. Its track record over the last 20 years is impressive: the stock has recently reached new all-time highs. Investors have been able to earn good money here over the last 20 years. The price increase alone amounts to almost 1,800 percent.
Source: Parker Hannifin stock price
The story could continue for some time, as Parker is taking advantage of structural growth opportunities. However, the consistent implementation of its strategic “Win Strategy” is also enabling the company to secure profitable growth, operational excellence, and long-term stability in an increasingly technology-driven environment. So far, the Cleveland, Ohio-based company is well on its way to continuing its successful course. However, with an expected P/E ratio of 28.5, the valuation is high – even by historical standards. Is such a premium still worthwhile for this quality stock? The following analysis of Parker Hannifin shares reveals more.
Parker Hannifin is a multinational technology and manufacturing company specializing in motion and control solutions. Its products cover a wide range of technologies, products, and systems for generating, controlling, and regulating motion and power in various applications—specifically, pumps and valves, motors, sensors, actuators, drives, and controls.
Source: StocksGuide AI-Insights
The business model is based on a combination of high-tech components, aftermarket spare parts, in-depth engineering expertise, and a global presence. Sales are essentially divided into three major segments:
In the Diversified Industrial – North America segment, Parker Hannifin focuses on the North American market, where it maintains manufacturing facilities and distribution networks in the US, Canada, and Mexico. It produces components for hydraulics, pneumatics, sealing technology, electromechanical systems, etc., which are used in a wide range of industries, such as manufacturing, transportation, construction, and agricultural machinery. Spare parts and parts for maintenance are also an important component of the business here. They give Parker a strong aftermarket business that generates recurring revenue. Its own sales network and independent distributors ensure dense market coverage. The operating margin in the North American Diversified Industrial segment is relatively high: In the first quarter of 2026, the ratio of adjusted segment income to revenue was 27 percent.
Parker operates outside North America in the Diversified Industrial – International segment, for example in Europe, Asia, and Latin America. Here, too, Parker supplies motion control solutions, fluid and gas control components, sealing systems, and more. The aftermarket business is also very important internationally, as Parker markets its products through a global distribution network and its own sales force. Margins are at a similar level internationally. In the first quarter of 2026, the adjusted operating segment margin was 25 percent. Growth is phased, and currency and economic effects have a stronger impact.
Parker's Aerospace Systems division supplies systems and components for the aerospace industry. These include actuators, fuel, oil, hydraulic and pneumatic systems, electrical power systems, sensors, fire extinguishing and braking systems, thermal management systems and fire protection systems. These products are sold to OEMs (aircraft manufacturers) as well as in the aftermarket, for example to companies that perform maintenance, repair, and overhaul (MRO) services. Parker serves this global market with a network of sales representatives and through direct sales, including to end users such as airlines and defense contractors. Interestingly, adjusted operating margins in this segment are the highest at 30 percent. Growth was also many times higher than in the other two segments.
Parker Hannifin's management is characterized by continuity and in-depth operational experience. Since January 1, 2023, the company has been led by Jennifer A. Parmentier as CEO. She previously held various senior positions at Parker for many years and is therefore very familiar with the internal processes, corporate culture, and strategic direction. Under her leadership, the focus is clearly on long-term, profitable growth, operational excellence, and the consistent implementation of the company's strategic initiatives.
Source: StocksGuide AI-Insights
Parker Hannifin strategically focuses on inorganic growth in the form of acquisitions to expand its product range, acquire new technologies, and strengthen its market position. A central element of this strategy is Parker's proven “Win Strategy” framework. It combines operational excellence, synergy effects, cost optimization, and integrated business processes to create added value through acquisitions. The fact that this works is demonstrated by the developments in sales and profits over the last few decades, as shown in the Parker Hannifin stock analysis below.
Parker has completed a number of significant acquisitions in recent years. One of the largest acquisitions was that of Meggitt, which was completed in September 2022 for approximately $7.2 billion. Meggitt was a British manufacturer of high-tech components for the aerospace and defense sectors. The acquisition significantly strengthened Parker's aerospace division, as a substantial portion of Meggitt's sales flow directly into the aerospace systems segment.
Another important acquisition was that of LORD Corporation in 2019 for approximately $3.7 billion. LORD brings technologies in the areas of adhesives, coatings, specialty materials, vibration management, and sensor technology to the table. These are of interest for both industrial and aerospace applications. The acquisition strengthened Parker's business in the area of engineered materials. It also created growth opportunities in the areas of lightweight construction, electrification, and specialized material solutions. A very recent acquisition, on the other hand, is that of Curtis Instruments, which Parker completed in 2025 for around US$1 billion. Curtis develops motor speed controllers, power electronics, instrumentation, and input devices, particularly with a view to electromobility and hybrid vehicle solutions. With Curtis, Parker is specifically expanding its range of products for electric and hybrid applications, thereby strengthening its portfolio in the field of mobile hydraulics and electrification. But now let's turn to the competition.
Parker Hannifin operates in a highly competitive environment characterized by a mix of global industrial groups and specialized niche suppliers. In the “Motion & Control” segment, Parker competes primarily with Eaton, Bosch Rexroth, Danaher, Emerson Electric, and Honeywell, which also offer hydraulic, pneumatic, fluid, and control solutions. These competitors differ in terms of specialized technologies, geographic presence, or customer focus, meaning that Parker must constantly defend its position.
Source: StocksGuide AI-Insights
In the aerospace segment, companies such as Moog, the Triumph Group, Safran, and the aviation divisions of Honeywell and Collins Aerospace are the main direct competitors. They are characterized by a high level of innovation, long-standing customer relationships with OEMs, and a strong aftermarket presence. However, in order to maintain market share, players must score points through technological differentiation, integrated system solutions, and a strong service and maintenance division.
In the international Diversified Industrial segment, Parker also competes with regionally strong manufacturers from Europe and Asia. These often produce cost-efficiently, but do not offer the same technological breadth or aftermarket coverage. However, all segments share an intensely competitive landscape characterized by increasing demands for efficiency, digitalization, electrification, and sustainability. This makes innovation and targeted acquisitions strategic success factors for Parker. However, there are also more specific challenges.
The market in the Diversified Industrial segment, for example, is facing increasing demands in the areas of automation, energy efficiency, and digitalization. At the same time, however, these factors are also driving growth. The aerospace market, on the other hand, is characterized by a high degree of specialization and long-term customer relationships. The growth drivers here are primarily rising passenger numbers, the modernization of aircraft, increased safety requirements, and the growing demand for more efficient and lighter systems. The aftermarket for maintenance, repair, and overhaul (MRO) is considered particularly attractive as it offers stable and recurring revenues, while OEM sales are highly project-dependent. Overall, the market is characterized by high technical requirements, long product life cycles, and strong customer loyalty. Geographically, the market is growing at a moderate pace in North America and Europe, while the Asia-Pacific region, particularly China and India, offers rapidly expanding industries and aviation markets. At the same time, trends such as electrification, Industry 4.0, sustainability, and lightweight construction are also changing demand profiles here. They open up opportunities for companies that combine technological expertise with a global presence.
Source: StocksGuide AI-Insights
Parker Hannifin also offers attractive opportunities, particularly because it is strongly established in numerous technological niches in drive and control technology and thus benefits from stable, recurring revenues from spare parts and aftermarket business. Its very broad product and technology range and its presence in various end markets such as industry, aviation, and mobile applications ultimately ensure that the company is less dependent on a single cycle and can better cushion the impact of downturns in individual sectors. In addition, structural megatrends such as automation, electrification, energy efficiency, and digital control systems open up long-term growth potential. Parker has also repeatedly demonstrated its ability to close technological gaps, expand its portfolio, and leverage economies of scale through targeted acquisitions, thereby increasing both sales and profitability, provided that the integration is successful. In doing so, they have often had a good nose for long-term trends.
However, external acquisitions are also considered a risk—not only in terms of the balance sheet, but above all in terms of operations, as it is crucial to leverage synergies and integrate corporate cultures appropriately. In addition, Parker is exposed to further risks as an industrial and aerospace supplier, as many of its end markets are cyclical and downturns in capital goods often lead to noticeable declines in sales and order intake. Rising raw material prices, bottlenecks in supply chains, or geopolitical tensions can quickly put pressure on the cost structure or limit delivery capacity, while currency movements create additional uncertainties due to the company's global presence. Technological competition is also developing dynamically, which means that new, more efficient, or cheaper solutions can lead to a loss of market share. However, the latest quarterly figures show that investors have little to worry about.
Parker Hannifin continued to demonstrate its operational strength in the past quarter, achieving new record results in several business areas. Among other things, it benefited from robust demand, particularly in the aerospace segment, while industrial end markets gradually recovered. The consistent implementation of the “Win Strategy” also paid off, once again contributing to efficiency gains and a significant expansion of margins. Management highlighted this as a key driver of the strong quarter. But now to the figures: Specifically, sales in the first quarter of 2026 (quarter end: September 30, 2025) increased by 4 percent to USD 5.1 billion. EBITDA rose by 8 percent to USD 1.3 billion, and net income increased by 16 percent to USD 808 million.
Source: Income Statement
Organic growth returned in the Diversified Industrial business in North America, boosted by improved performance in the industrial applications, aerospace & defense, and off-highway sectors. Despite slightly lower sales compared to the previous year, this segment achieved a record margin, clearly reflecting operational progress, and orders also continued to rise. Specifically, sales declined by 2.7 percent to USD 2.044 billion, while organic sales increased by 2.1 percent. Segment profit was USD 507 million, with a corresponding margin of 24.8 percent, compared with 23.1 percent in the previous year.
International activities also recorded solid growth, albeit with regional variations. It was 3.2 percent, but only one percent organically. The Asia-Pacific region in particular developed dynamically, while Europe remained weaker. Here, too, Parker achieved new records in both sales and profitability, supported by higher order intake and a further improvement in operational efficiency. The operating margin was 22.4 percent, compared to 22.1 percent in the previous year, with segment earnings of $314 million for the quarter.
The aerospace segment was once again a key growth driver, with sales up 13.3 percent and organic growth of 12.8 percent. Parker achieved record sales and a significantly higher margin thanks to strong demand in the OEM business and continued aftermarket momentum. The segment's operating margin in the first quarter of 2026 was 25 percent, up from 22.3 percent in the previous year. With sales of $1.4 billion, operating segment income was $314 million. Demand was broadly based and orders rose by double digits, indicating a continued strong market environment in aviation.
Across all areas, order intake rose by eight percent, with the order backlog reaching a new high of US$11.3 billion. This development alone shows that Parker not only had a strong quarter, but is also entering the coming periods with tailwinds thanks to a significantly improved order level. But now to the specific outlook.
Parker Hannifin is looking ahead to the current 2026 financial year with an improved outlook. It raised its forecasts in its latest quarterly report, underscoring the positive momentum from the first quarter. Overall, stronger sales growth is now expected, driven by both solid organic development and the integration of the Curtis acquisition. At the same time, Parker expects currency effects to provide additional tailwinds, while the impact of divestitures already completed will remain manageable. In terms of sales, revenue is expected to grow between 4 and 7 percent by the end of 2026 (June 30, 2026). Organic growth is expected to be 4 percent.
There is also growing optimism on the earnings side. Management expects higher segment margins here, confirming the success of the ongoing efficiency programs and the consistent implementation of the “Win Strategy.” The improved profitability is expected to be reflected in significantly higher operating performance and structurally stronger margins, both reported and adjusted. Specifically, an operating margin of 24 percent is expected at the end of the year in the best-case scenario. On an adjusted basis, the figure rises to 27.2 percent. Parker also expects earnings per share to be higher than previously anticipated. The range is expected to be between $25.53 and $26.33 (adjusted: $29.60 – $30.40). The increase in the EPS forecast reflects both strong operating performance and the contribution from the Curtis integration, and shows that the company is targeting another year of solid, profitable growth. Parker is thus sending a clear signal that it is well positioned to benefit from stable demand, an improved order situation, and the results of its disciplined business model.
Source: Sales and Margin forecast
Looking at analysts' estimates for the coming years, the pace of growth is not expected to slow significantly. Average revenue growth of over 5 percent per annum is expected. Net profit growth is expected to be in the high single digits.
The Levermann analysis for Parker Hannifin paints a mixed picture: on the one hand, the company has clear strengths, but on the other hand, there are some valuation and momentum risks. In any case, the extremely positive profitability figures are striking. A return on equity of over 25 percent, an EBIT margin of a good 21 percent, and an equity ratio of more than 46 percent each lead to one point and confirm the strong operational quality of the company.
On the valuation side, however, there is headwind. Both the average five-year P/E ratio and the forward P/E ratio are in the higher range, which leads to a point deduction in each case. The market is therefore valuing Parker with a possible valuation premium. More on that later. Analyst sentiment is also rather positive, which leads to a minus point in the Levermann strategy, as it is a contraindicator.
Market reactions, on the other hand, are predominantly positive. The company achieved a significantly positive share price reaction after its last quarterly report, and both its six-month and twelve-month performance are clearly in positive territory, which is rewarded with points in each case. However, the longer-term price momentum is relativized by a neutral result in the momentum structure (criterion 11). The three-month reversal also receives no points, as the last two months were weaker than the S&P 500.
In terms of earnings growth, Parker is delivering solid single-digit growth, which contributes to another point in the rating, while earnings revisions are neutral overall.
Source: Levermann analysis
Overall, Parker Hannifin shares score 4 out of a possible 13 points in the Levermann analysis, which corresponds to a buy rating for large caps according to the Levermann model. The shares clearly impress in terms of quality and profitability, but their overall score is held back by their high valuation and somewhat inconsistent momentum.
Given the expected earnings growth, Parker Hannifin's valuation appears solid, but no longer particularly favorable. The expected P/E ratio of 28.6 shows that the market is already pricing in strong earnings growth for the next twelve months. And indeed, growth is taking place, but relative to the expected net earnings growth of 7.5 percent, the P/E ratio still seems too high. One explanation could be a market premium for the company's stability, profitability, and strong market position.
However, Parker Hannifin shares have always been expensive. Looking at the history, the average P/E ratio for the last 20 years is 19.3. This figure is one-third below the current P/E ratio. Only an increase in growth could justify this value. However, looking at the growth rates of sales and net profit, this cannot be confirmed. On the contrary, growth has been flattening out over the last twelve months since 2024.
Source: StocksGuide Charts
The ratio of enterprise value to free cash flow (EV/FCF) of 35 also indicates that investors are paying a comparatively high multiple for Parker's free cash flows. However, against the backdrop of expected free cash flow growth of 9.9 percent, this narrative remains unchanged. Parker Hannifin could therefore be a high-quality company, but one whose valuation premium is only partially justified by growth – especially given the existing risks. These risks can be seen in the cyclical fluctuations of the core markets, such as aviation, industry, and construction. Such cycles are known to have an impact on sales and margins. This is also confirmed by Parker's bare figures. In addition, rising raw material prices, supply chain bottlenecks, and currency and geopolitical risks can have a negative impact. Technological competition, aggressive pricing, and integration risks in acquisitions are further potential challenges. In addition, regulatory requirements, liability issues, and rising ESG expectations can lead to additional costs or operational restrictions.
Source: StocksGuide Chart
However, Parker Hannifin has been demonstrating extremely positive development for more than 20 years, which is not always the norm for M&A-driven companies. I am particularly impressed by the fact that a huge number of shares have recently been bought back, which has further fueled EPS growth. At the same time, net debt in relation to cash flows has actually improved.
Parker Hannifin is a technologically diversified company with a solid market position in the industrial and aerospace sectors. The combination of innovative solutions, global presence, and a stable aftermarket business ensures long-term stability and recurring revenues. Operationally, the American company impresses with strong margins, growth drivers in key segments, and the successful integration of acquisitions. However, the price for an investment is high. Risks due to cyclicality, commodity prices, currency, and competition remain, meaning that part of the future potential is already priced in. Parker must first grow into this valuation.
Source: Target price
Analysts, on the other hand, are predominantly positive about the stock. Of the 25 ratings recorded, 76 percent recommend buying, while 24 percent advise holding. The average price target of $841.50 is only slightly above the current price of $841.50, meaning that the short-term price potential over one year already appears to have been fully exhausted at -2.34 percent. Investors who need a larger risk buffer could set up an alert. A price of $650 would be a first marker. At $550, the stock could be a bargain.
The author and/or persons or companies associated with StocksGuide own or may own shares of Okta. This article represents an expression of opinion and does not constitute investment advice. Please note the legal information.