Breaking Down Parker-Hannifin Corporation (PH) Financial Health: Key Insights for Investors

Are you an investor seeking a comprehensive understanding of Parker-Hannifin Corporation's (PH) financial standing? Do you want to know how the company's strategic initiatives and market dynamics are shaping its financial future? In fiscal year 2024, the company achieved record sales of nearly $20 billion and a 36% increase in earnings per share, reaching $21.84. But how sustainable is this growth, and what are the key factors driving it? Dive in to explore the key insights into Parker-Hannifin's financial health, providing you with the knowledge to make informed investment decisions.

Parker-Hannifin Corporation (PH) Revenue Analysis

Parker-Hannifin Corporation's revenue streams are diverse, stemming from various products, services, and geographic regions. Understanding these streams and their historical performance is crucial for investors.

Parker-Hannifin Corporation reported total sales of $19.1 billion for fiscal year 2024. Mission Statement, Vision, & Core Values of Parker-Hannifin Corporation (PH).

Below is a breakdown of revenue by operating segment for fiscal year 2024:

• Aerospace Systems: $3.06 billion
• Motion Systems: $5.94 billion
• Diversified Industrial: $10.05 billion

Parker-Hannifin operates across several key regions. A geographical revenue breakdown helps to identify core markets and growth areas.

The following table summarizes Parker-Hannifin's sales by geographic region for 2024:

Parker-Hannifin Corporation (PH) Profitability Metrics

Understanding Parker-Hannifin Corporation's financial health requires a close examination of its profitability metrics. Key indicators such as gross profit, operating profit, and net profit margins provide insights into the company's efficiency and overall financial performance.

Gross Profit: Gross profit is the revenue remaining after deducting the cost of goods sold (COGS). It indicates how efficiently a company manages its production costs. For the fiscal year 2024, Parker-Hannifin reported a gross profit of $7.95 billion.

Operating Profit: Operating profit is calculated by deducting operating expenses from gross profit. It reflects the profit earned from the company's core business operations before interest and taxes. Parker-Hannifin's operating profit for fiscal year 2024 was $4.46 billion, demonstrating robust operational efficiency.

Net Profit: Net profit, often referred to as the bottom line, is the profit remaining after all expenses, including interest and taxes, have been deducted from revenue. In 2024, Parker-Hannifin's net profit stood at $3.08 billion.

Profitability Margins: These margins provide a percentage view of profitability, allowing for easier comparison over time and against industry peers:

• Gross Profit Margin: Calculated as (Gross Profit / Revenue) 100, Parker-Hannifin's gross profit margin for 2024 was approximately 34.7%.
• Operating Profit Margin: Calculated as (Operating Profit / Revenue) 100, the operating profit margin was about 19.5% in 2024.
• Net Profit Margin: Calculated as (Net Profit / Revenue) 100, the net profit margin was approximately 13.5% in 2024.

Trends in Profitability Over Time: Analyzing profitability trends over several years helps to identify whether Parker-Hannifin's financial performance is improving, declining, or remaining stable. For example, comparing the 2024 gross profit margin of 34.7% with previous years can reveal whether the company is becoming more efficient in managing its production costs.

Comparison with Industry Averages: Comparing Parker-Hannifin's profitability ratios with industry averages provides valuable context. If the company's gross profit margin of 34.7% is higher than the industry average, it suggests that Parker-Hannifin is more efficient or has a stronger pricing strategy than its competitors.

Analysis of Operational Efficiency: Operational efficiency can be assessed by examining trends in cost management and gross margin. A rising gross margin indicates that the company is either reducing its production costs or increasing its prices effectively. Parker-Hannifin's focus on strategic acquisitions and cost-saving initiatives has likely contributed to its strong operational efficiency.

The following table summarizes Parker-Hannifin's key profitability metrics for the fiscal year 2024:

For further insights into the company's mission, vision, and core values, you can explore: Mission Statement, Vision, & Core Values of Parker-Hannifin Corporation (PH).

Parker-Hannifin Corporation (PH) Debt vs. Equity Structure

Understanding how Parker-Hannifin Corporation (PH) finances its operations and growth is crucial for investors. This involves analyzing its debt levels, debt-to-equity ratio, and recent financing activities to assess its financial leverage and risk.

Parker-Hannifin Corporation (PH) employs a mix of debt and equity to fund its operations. As of the third quarter of fiscal year 2024, the company’s balance sheet reflects the following:

• Total debt: $6.3 billion
• Total equity: $7.9 billion

The debt-to-equity ratio, calculated by dividing total debt by total equity, provides insights into the company's financial leverage. For Parker-Hannifin Corporation (PH), the debt-to-equity ratio is approximately 0.79 as of Q3 2024.

A debt-to-equity ratio of 0.79 indicates that Parker-Hannifin Corporation (PH) has a moderate level of debt relative to its equity. To contextualize this, it's helpful to compare it against industry standards. The industrial manufacturing sector, in which Parker-Hannifin Corporation (PH) operates, typically sees debt-to-equity ratios ranging from 0.5 to 1.5. Parker-Hannifin Corporation (PH)'s ratio falls within this range, suggesting a balanced approach to financing.

Recent activities, such as debt issuances, credit ratings, or refinancing, can significantly impact a company's financial health. As of now, specific details on recent debt issuances or refinancing activities impacting Parker-Hannifin Corporation (PH)'s debt structure are not available. For detailed and up-to-date information, consulting the latest financial filings and announcements from Parker-Hannifin Corporation (PH) is recommended.

Parker-Hannifin Corporation (PH) strategically balances debt and equity to optimize its capital structure. Debt financing can provide tax advantages and potentially lower the cost of capital, while equity financing can reduce financial risk and provide flexibility. The company's approach to balancing these two depends on various factors, including market conditions, growth opportunities, and strategic priorities.

Here’s a summary of Parker-Hannifin Corporation (PH)’s debt and equity composition:

Understanding Parker-Hannifin Corporation (PH)'s debt versus equity structure is essential for assessing its financial risk and stability. By monitoring key metrics such as the debt-to-equity ratio and staying informed about recent financing activities, investors can gain valuable insights into the company's financial strategy and overall health. For more insights into Parker-Hannifin Corporation (PH), check out: Exploring Parker-Hannifin Corporation (PH) Investor Profile: Who’s Buying and Why?

Parker-Hannifin Corporation (PH) Liquidity and Solvency

Assessing Parker-Hannifin Corporation's (PH) liquidity involves examining its ability to meet short-term obligations. Key metrics like the current and quick ratios provide insights into the company's liquidity position. Additionally, analyzing working capital trends and cash flow statements offers a comprehensive view of its financial health.

For the fiscal year 2024, Parker-Hannifin reported a current ratio of 1.67, indicating its assets are 1.67 times its current liabilities. The quick ratio, which excludes inventory, stood at 1.22, reflecting a strong immediate liquidity position. These ratios suggest a healthy capacity to cover short-term obligations.

Examining the trends in working capital provides further clarity. Parker-Hannifin's working capital at the end of fiscal year 2024 was $2.984 billion.

A review of the cash flow statements reveals the following trends:

• Cash flow from operations: $3.431 billion
• Cash flow from investing: ($639.7) million
• Cash flow from financing: ($2.394) billion

The positive operating cash flow indicates the company's ability to generate cash from its core business activities. The negative investing cash flow largely reflects investments in acquisitions and capital expenditures. The negative financing cash flow is primarily due to share repurchases and dividend payments, reflecting a return of capital to shareholders.

Overall, Parker-Hannifin exhibits a strong liquidity position, supported by healthy current and quick ratios, positive working capital, and robust operating cash flow. Potential investors can find additional information in this profile: Exploring Parker-Hannifin Corporation (PH) Investor Profile: Who’s Buying and Why?

Parker-Hannifin Corporation (PH) Valuation Analysis

Assessing whether Parker-Hannifin Corporation (PH) is overvalued or undervalued involves examining several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios, and analyst consensus.

Valuation Ratios:

• Price-to-Earnings (P/E) Ratio: As of January 31, 2025, Parker-Hannifin's P/E ratio stood at 26.8x, compared to the sector median of 17.7x. This suggests that the stock might be trading at a premium compared to its peers.
• Price-to-Book (P/B) Ratio: The P/B ratio for Parker-Hannifin was 4.7x, while the sector median was 2.6x. A higher P/B ratio could indicate that the stock is overvalued relative to its book value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: Parker-Hannifin's EV/EBITDA ratio was 18.1x, versus a sector median of 12.3x. This indicates a potentially higher valuation compared to its industry counterparts.

Stock Price Trends:

Over the past year, Parker-Hannifin's stock has shown significant growth. As of April 18, 2024, the stock price was $393.64. By April 17, 2025, it had risen to $489.82, reflecting a year-over-year increase of approximately 24.4%. This upward trend suggests strong investor confidence and positive market sentiment.

Dividend Information:

Parker-Hannifin has a consistent history of dividend payments. The annual dividend payout for 2024 was $6.08 per share. As of March 14, 2025, the company declared a quarterly dividend of $1.63 per share, payable on June 6, 2025, to shareholders of record as of May 16, 2025. The dividend yield, reflecting the dividend as a percentage of the stock price, provides insight into the return on investment from dividends alone.

Analyst Ratings:

Analyst ratings provide a comprehensive view of Parker-Hannifin's stock. As of April 2025:

• Buy Recommendations: Several analysts have assigned a 'Buy' rating to Parker-Hannifin's stock, indicating expectations of outperformance.
• Hold Recommendations: A significant number of analysts recommend holding the stock, suggesting a neutral outlook.
• Price Targets: Price targets from various analysts range from $475.00 to $550.00, reflecting different perspectives on the stock's potential upside.

Here is a detailed snapshot of Parker-Hannifin's valuation metrics as of January 2025:

Considering these factors, Parker-Hannifin appears to be trading at a premium compared to its peers. While the stock has demonstrated strong price appreciation and consistent dividend payouts, investors should weigh these positives against the higher valuation ratios.

To gain more insights into investor behavior and ownership trends, consider reading: Exploring Parker-Hannifin Corporation (PH) Investor Profile: Who’s Buying and Why?

Parker-Hannifin Corporation (PH) Risk Factors

Understanding the risks Parker-Hannifin Corporation (PH) faces is crucial for investors. These risks can be both internal and external, significantly impacting the company's financial health. External factors include industry competition, regulatory changes, and overall market conditions. Internally, operational, financial, and strategic risks can emerge, as highlighted in earnings reports and filings.

Here's a breakdown of key risk areas:

• Economic Conditions: Economic downturns in key markets can reduce demand for Parker-Hannifin's products and services, affecting sales and profitability.
• Competition: Intense competition in the industrial sector can pressure Parker-Hannifin's pricing and market share.
• Supply Chain Disruptions: Disruptions in the global supply chain can increase costs and delay production, impacting financial results.
• Regulatory Changes: Changes in environmental, safety, or other regulations can increase compliance costs and affect operations.
• Technology and Innovation: The need to continually innovate and adapt to technological advancements poses a risk if Parker-Hannifin fails to keep pace with industry changes.
• Financial Risks: Fluctuations in currency exchange rates, interest rates, and commodity prices can impact financial performance.
• Cybersecurity: The increasing threat of cyberattacks poses a risk to Parker-Hannifin's data, systems, and operations.

To mitigate these risks, Parker-Hannifin employs various strategies, which may include diversifying its markets and product offerings, investing in research and development, implementing robust risk management programs, and maintaining a strong financial position.

More detailed information about Parker-Hannifin's investor profile can be found here: Exploring Parker-Hannifin Corporation (PH) Investor Profile: Who’s Buying and Why?

Parker-Hannifin Corporation (PH) Growth Opportunities

Parker-Hannifin Corporation (PH) demonstrates strong future growth prospects driven by several key factors. These include product innovations, strategic market expansions, acquisitions, and effective partnerships.

Key growth drivers for Parker-Hannifin include:

• Product Innovations: Continuous investment in research and development fuels the creation of advanced technologies and solutions.
• Market Expansions: Strategic initiatives to penetrate new geographic markets and expand the company’s global footprint.
• Acquisitions: Targeted acquisitions that complement existing product lines and expand market reach.

Parker-Hannifin's strategic initiatives and partnerships play a crucial role in driving future growth. These collaborations enhance the company's capabilities and market presence.

Parker-Hannifin possesses several competitive advantages that position it for sustained growth:

• Diversified Product Portfolio: A broad range of products and solutions reduces reliance on any single market or industry.
• Global Footprint: A well-established global presence enables the company to serve customers worldwide and capitalize on growth opportunities in emerging markets.
• Strong Customer Relationships: Long-standing relationships with key customers provide a stable revenue base and opportunities for cross-selling and upselling.

While specific future revenue growth projections and earnings estimates require real-time financial analysis, historical data and current market trends suggest a positive outlook for Parker-Hannifin. Investors can stay informed about Parker-Hannifin Corporation (PH) financial health and gain valuable insights by visiting: Breaking Down Parker-Hannifin Corporation (PH) Financial Health: Key Insights for Investors

A summary of Parker-Hannifin Corporation's financial data based on the 2024 fiscal year is presented in the table below: