QS Research · Michael Burry's Scion Capital analyst template · 2006
Parker-Hannifin Corp (PH)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case 0% · downside -30% · upside +14%
Scion's base is section 13's TTM to Sep 30, 2026: EBITDA $6.29B, net income to common $3.72B and FCF $3.85B [N14,N15,N18]. At today's 20.9x EV/EBITDA the equity math is (6.29*20.9 - 15.84)/126.10 = about $917, so the base case is roughly flat and the market is not missing current earnings [N28,N24,N5,N1]. I keep that TTM EBITDA base for all three cases and only change the multiple where cited catalysts justify it: 15.3x downside on GAAP/acquisition noise is about $638 (-30.5%), while 22.8x-23.5x upside on the raised FY27 guide, record $13.7B backlog and FY31 30% adjusted segment margin target is about $1,012-$1,046 (+10.2% to +14.0%) [S5,S6,S8,S16,S30]. The long rule needs a +30% base and no worse than -25% downside, and the short rule needs a -30% base with upside <= +25%; neither is met, so this is a watch, not a long or short.
Key numbers
- Share price: $917.79
- Market cap: $115.73B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $22.41B
- EV / EBITDA (TTM): 20.9x
- P/E (TTM): 31.1x
- Price / book: 7.25x
The 15 boxes
- ✓ 1. Long-form business notes
Parker-Hannifin is a two-segment motion-and-control manufacturer: Diversified Industrial (67% of FY2026 net sales of $21.5B) and Aerospace Systems (33%), a mix much more aerospace-weighted than FY2021, when sales were $14.3B and Aerospace was 17%. Revenue rose from $14.35B (FY2021) to $21.50B (FY2026) with operating income up from $2.46B to $5.07B and net income to common from $1.75B to $3.65B, and operating cash flow from $2.58B to $4.36B against capex of only $459M. Backlog was $12.8B at June 30, 2026 versus $11.0B a year earlier, with about 70% due in the next twelve months. The FY2026 10-K describes Diversified Industrial as an aggregation of business units rather than the five named product groups used in the FY2021 10-K.
- ✓ 2. Competitive advantage
Parker's numbers show a business widening margins rather than just growing: operating income went from $2.46B (FY2021) to $5.07B (FY2026) on revenue of $14.35B to $21.50B, lifting operating margin from roughly 17% to roughly 24% (my arithmetic on the XBRL facts), with net income to common up from $1.75B to $3.65B and equity from $8.40B to $15.40B. The moat that the 10-K describes is breadth and application engineering, not brand or licences: hundreds of competitors across 44 countries, no single competitor across the whole product line, OEM design wins that pull follow-on aftermarket, and a portfolio of patents where no single one is material. Capital intensity is very low (FY2026 capex $459M against $4.36B operating cash flow), which is what lets the returns hold up; the counterweight is the company's own admission that price increases can lag raw-material costs and that fixed-price contracts and pricing pressure can block pass-through.
- ✓ 3. 10-Q takeaways
The Sep 30, 2026 10-Q (Q1 FY2027) shows sales up 17.9% to $5,992M, organic +11.5%, with acquisitions +6.9% and a -0.5% IEEPA tariff-return drag; gross margin was 37.7% vs 37.5% and segment operating margin 24.4% GAAP / 28.6% adjusted. Cash was $711M, operating cash flow $752M vs $782M, inventory days 92 vs 86 at Jun 30, and buybacks were only $75M vs $475M a year ago. The Nov 5, 2026 earnings release raised FY27 guidance to reported sales +16-19%, organic +7.5-10.5%, and adjusted EPS $36.45-$37.25; the computed risk-factor diff shows 13 new/rewritten paragraphs.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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