Investment Thesis
Parker-Hannifin demonstrates solid operational fundamentals with strong profitability margins (23.1% operating, 16.1% net) and robust free cash flow generation ($1.5B), positioning it as a financially healthy industrial manufacturer. Despite flat revenue growth, the company maintains healthy liquidity and moderate leverage (0.52x debt/equity), though the slight margin of interest coverage warrants monitoring in a rising rate environment.
PH Strengths
- Strong operating margins of 23.1% indicating efficient cost management and pricing power
- Robust free cash flow of $1.5B with healthy 14.2% FCF margin supporting capital allocation flexibility
- Moderate leverage at 0.52x debt/equity with adequate interest coverage of 6.1x providing financial stability
- Solid net margin of 16.1% demonstrating consistent profitability despite revenue stagnation
- Positive insider activity with 13 Form 4 filings in last 90 days suggesting management confidence
PH Risks
- Revenue declined 0.4% YoY indicating potential market headwinds or competitive pressures
- Current ratio of 1.18x is adequate but not conservative, limiting financial flexibility for unexpected challenges
- Quick ratio of 0.66x reveals potential liquidity stress if short-term obligations accelerate without cash conversion
- High long-term debt at $7.5B represents 52% of equity, limiting capacity for major acquisitions or downturns
- Flat to negative growth trajectory raises concerns about market share and competitive positioning
Key Metrics to Watch
- Revenue growth trajectory - need to see positive growth to confirm cyclical trough vs structural decline
- Operating margin stability - monitor for pricing power sustainability and cost inflation impact
- Free cash flow generation - ensure FCF conversion remains >90% of net income amid growth challenges
- Debt service coverage - track interest coverage ratio to ensure financial flexibility remains adequate
- Working capital management - watch current and quick ratios for deterioration signaling operational stress
PH Financial Metrics
PH Profitability Ratios
PH Balance Sheet & Liquidity
PH 5-Year Financial Trend
5-Year Trend Summary: Parker-Hannifin Corp's revenue has grown significantly by 39% over the 5-year period, indicating strong business expansion. The most recent EPS of $16.04 reflects profitable operations.
PH Growth Metrics (YoY)
PH Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q2 2026 | $4.7B | $845.0M | $6.60 |
| Q1 2026 | $4.9B | $698.0M | $5.34 |
| Q3 2025 | $5.0B | $726.7M | $5.56 |
| Q2 2025 | $4.7B | $682.1M | $5.23 |
| Q1 2025 | $4.8B | $651.1M | $4.99 |
| Q3 2024 | $5.1B | $591.0M | $4.54 |
| Q2 2024 | $4.7B | $395.5M | $3.04 |
| Q1 2024 | $4.2B | $388.0M | $2.98 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
PH Capital Allocation
PH SEC Filings
Access official SEC EDGAR filings for Parker-Hannifin Corp (CIK: 0000076334)