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Parker Hannifin
Hybrid Industrial
★ Quality 58/100Price today
$962.59
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What this business is made of
The business
The cheap part the expensive machine won't start without.
Parker Hannifin makes motion and control systems: hydraulics, pneumatics, filtration, sealing, and aerospace components. It sells to industrial manufacturers, aircraft, and heavy machinery — millions of critical parts that cost little compared to the equipment they keep running. FY2025 revenue of $19.9B, 37% gross margin, FCF of $3.3B.
The moat lives in the catalog: 400,000+ SKUs embedded in machines the customer won't redesign to save pennies. The Meggitt acquisition filled out the aerospace side, where a certified part generates decades of high-margin spares. Not a monopoly, but switching suppliers costs more than staying.
Revenue history
From $14.3B to $19.9B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $21.5B · FY2026
Of every $100 in sales, $83 goes to costs and operations; $17 is left as net profit (17% margin).
Catalysts and risks
Meggitt integration: target of $300M in annual synergies by FY2026.
Aerospace grew double digits; defense backlog and aftermarket support pricing.
$7.5B debt coming down with $3.3B of annual FCF — deleveraging frees up capital.
Cyclical industrial business: a manufacturing recession hits volume fast.
$7.5B debt against $0.5B cash leaves little cushion if rates rise.
No dominant moat: competes against Eaton, Emerson, and niche rivals in every line.
Charlie's note
“Paying nearly 21x for a catalog of 400,000 embedded parts nobody redesigns to save pennies is a sensible price for an expensive switching moat; with a 37% gross margin and Meggitt feeding decades of aerospace spares, the 8% growth is offset by quality — the rest is sitting still and waiting.”
Analysis · June 2026
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