Is There Still Upside in Parker-Hannifin After Major Acquisition and a 23% Rally in 2025?

• Curious if Parker-Hannifin could still be a great value play after all its gains? You are not alone, as plenty of investors want to know if there is more upside left or if the stock is looking pricey.
• The shares are up a remarkable 23.0% year to date and have soared 216.7% over the past five years. However, the last month has seen a more muted 1.4% move.
• Recent headlines have highlighted Parker-Hannifin's strategic expansion in motion and control technologies, including major acquisition activity that continues to generate excitement among market watchers. These moves have fueled speculation about the company’s longer-term growth and competitive position.
• Parker-Hannifin currently scores 2 out of 6 on our valuation checks, suggesting there are some value signals but also possible red flags to weigh. We will break down what this means using a mix of popular and under-the-radar valuation methods, and at the end, share the most insightful way to judge value right now.

Parker-Hannifin scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Parker-Hannifin Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's dollars. This approach attempts to answer what Parker-Hannifin's shares should be worth based on the business's underlying cash generation potential rather than market hype.

For Parker-Hannifin, the current Free Cash Flow (FCF) stands at $3.37 Billion. Analysts forecast the company's annual FCF will grow steadily, reaching a projected $4.71 Billion by 2029 and about $5.72 Billion by 2035. The first five years of forecasts are based on Wall Street estimates. Further projections rely on Simply Wall St's extrapolations of moderate long-term growth rates.

Based on this model, Parker-Hannifin's estimated intrinsic value lands at $641.80 per share. However, the DCF implies that today's stock price is roughly 20.6% above this fair value estimate, suggesting the shares are currently overvalued by DCF standards.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Parker-Hannifin may be overvalued by 20.6%. Discover 849 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Parker-Hannifin.

Approach 2: Parker-Hannifin Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies because it reflects what investors are willing to pay today for a dollar of future earnings. This makes it especially relevant for Parker-Hannifin, which has a strong earnings record and consistent profitability.

What counts as a “normal” PE ratio can vary depending on factors like earnings growth and business risk. Faster-growing or lower-risk companies typically command higher PE ratios, while those facing more uncertainty or slower growth trade at lower multiples.

Parker-Hannifin currently trades at a PE ratio of 27.74x. This is higher than the broader Machinery industry average of 23.95x, but below the average of its direct peers at 36.35x. To help investors cut through these noisy comparisons, Simply Wall St introduces the “Fair Ratio,” which, in this case, is calculated at 27.97x. This proprietary metric incorporates not just sector and peer benchmarks, but also Parker-Hannifin’s specific growth profile, profit margins, risks, and market cap.

Comparing Parker-Hannifin’s actual PE ratio of 27.74x with the Fair Ratio of 27.97x, the stock is priced very close to fair value based on its earnings. This tailored approach suggests that, despite recent gains, the shares are neither notably overvalued nor undervalued on this metric.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1407 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Parker-Hannifin Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story of how you think Parker-Hannifin’s business will evolve, blending both your outlook on its future (expected revenue, earnings, and margins) and what you believe is a fair price for the stock today.

Narratives connect the dots between a company’s fundamental story, its future financial forecasts, and a calculated fair value. This makes investment decisions more meaningful than just relying on formulas. They are also easy to create and share on Simply Wall St’s Community page, which is already trusted by millions of investors to test and refine their ideas.

This approach helps you decide whether to buy, sell, or hold by letting you directly compare your Narrative’s fair value to the current market price. In addition, Narratives update automatically when market-moving news, earnings updates, or analyst outlooks change, helping your perspective stay timely and relevant.

For example, in the latest Parker-Hannifin Narratives, some investors build a bullish story around continued automation demand, margin growth, and share repurchases that support fair values as high as $880 per share. Others see elevated aerospace risks and cost pressures, resulting in fair values closer to $500 per share. Whatever your view, Narratives let you clearly articulate and visualize your own Parker-Hannifin investment case.

Do you think there's more to the story for Parker-Hannifin? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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