QS Research · Michael Burry's Scion Capital analyst template · 2006
Parker-Hannifin Corp (PH)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -3% · downside -32% · upside +13%
All cases use the TTM to Sep 30, 2026 base in section 13—net income $3.72B and EBITDA $5.65B (N10, N14, N13)—not a multi-year average. Base: at the peer-high 22.7x EV/EBITDA on $5.65B EBITDA (S1, N13), section 13's arithmetic gives $891/share, -3% from $917.79 (N1); downside: at the peer-low 21.3x P/E on $3.72B net income it gives $628/share, -32%; upside: at the peer-high 35.2x P/E it gives $1,038/share, +13% (S1, N14, N5, N1). The market is not missing the quality—FY2026 operating cash flow was $4.36B and operating margin about 24% (S24)—but it is paying 23.3x EV/EBITDA, above every peer, while a debt-funded ~$11.8B M&A program and a ~$6.80 GAAP-to-adjusted FY2027 EPS gap cloud the earnings (N26, S1, S28, S33, S91). That fails the long rule (base -3%, downside -32%) and fails the short rule because the base case is not -30%; I would watch for a better short setup or a lower entry rather than underwrite a long at this multiple.
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): 23.3x
- P/E (TTM): 31.1x
- Price / book: 7.25x
The 15 boxes
- ✓ 1. Long-form business notes
Parker is a two-segment motion-and-control manufacturer: FY2026 net sales of $21.5B split 67% Diversified Industrial / 33% Aerospace Systems, versus 83% / 17% of $14.3B in FY2021, so the portfolio has tilted sharply toward aerospace. Revenue went $14.35B (FY2021) to $21.50B (FY2026) and operating income $2.46B to $5.07B, with FY2025 the only flat year ($19.93B to $19.85B). It is an asset-light, high-cash business: FY2026 operating cash flow $4.36B against capex of $459.0M, and backlog was $12.8B at June 30, 2026.
- ✓ 2. Competitive advantage
Parker's edge is systems breadth and an installed base, not a single monopoly: it sells through divisions in 44 countries against 'hundreds of competitors', and no rival competes with it across the whole catalog. The return record supports a real, moderate advantage: operating income rose every year from $2.46B (FY2021) to $5.07B (FY2026) on revenue of $14.35B to $21.50B, roughly a 17% to 24% operating margin, with FY2026 operating cash flow of $4.36B against only $459M of capex. The clearest switching-cost asset disclosed is Aerospace: original equipment wins on new aircraft programs convert into follow-on repair and replacement business.
- ✓ 3. 10-Q takeaways
The Q1 FY2027 10-Q (quarter ended 2026-09-30) shows sales of $5,992M, up 17.9% reported and 11.5% organic, with acquisitions adding 6.9 points and IEEPA tariff returns shaving 0.5 point. Gross margin was 37.7% vs 37.5%, while SG&A rose to 17.8% of sales and Diversified Industrial margin fell 40 bps; Aerospace margin rose 160 bps. Operating cash flow was $752M vs $782M, inventory days 92 vs 86 at June 30, and buybacks were only $75M vs $475M as cash went to the ~$9.1B FGC acquisition. Guidance items include a ~22.5% FY2027 tax rate and $75M realignment plus $35M integration charges; CIRCOR Aerospace is pending.
- ✓ 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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