Value
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.0 |
| P/S | 6.6 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 5.5 |
| PEG | 3.7 |
| Analyst target | 6.0 |
- ▸Forward P/E: 23.4x
- ▸PEG: 3.05
PH · Why this verdict
Why Parker-Hannifin (PH) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Parker-Hannifin has delivered four consecutive earnings beats averaging 7.2% above estimates with a wide economic moat and operating margins of 17%, but the stock is richly valued at a forward P/E of 26.9x and trades at its analyst price target leaving little near-term upside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Parker-Hannifin carries a wide economic moat with operating margins of 17%, a Piotroski F-Score of 7 out of 9, and superior ROE versus peers — demonstrating compounder-quality characteristics in industrial machinery. Quality breakdown | Operating margins remain above 15% and ROE stays above peer median for at least 4 consecutive quarters. | →Stable |
| CounterFree cash flow conversion at 80% of net income falls short of the highest-quality peers, suggesting some earnings are not being fully converted to cash. | ||
Parker-Hannifin beat earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 7.2%, reflecting disciplined cost management and pricing power across industrial cycles. Earnings | Earnings beat streak extends to 6 quarters with average quarterly surprise remaining above 5%. | ↓Deteriorating |
| CounterThe most recent beat was only 4.4%, the smallest in the streak, potentially indicating that consensus expectations have caught up to management's delivery pace. | ||
At a forward P/E of 26.9x and a PEG ratio of 3.59, the stock is expensively valued relative to its growth rate, with current price already at the analyst target implying only 1.1% further upside. Valuation breakdown | Stock earnings growth accelerates to justify current valuation, with next twelve months EPS growth exceeding 15% to bring the PEG ratio below 2.0. | ↓Deteriorating |
| CounterPremium valuation for a wide-moat industrial compounder can persist for years; investors may continue to pay up for the consistency and quality of Parker-Hannifin's business. | ||
News sentiment is positive at +0.70 based on recent coverage, momentum score is 7.4 out of 10, and volume is accumulating with a rising OBV — the stock is in a technical breakout pattern above all major moving averages. Sentiment breakdown | Momentum score remains above 6.5 and the stock holds above its 200-day moving average for 6 consecutive months. | Tripped↑Improving |
| CounterThe stock is above the analyst-estimated max pain level of $690, and a position above max pain often creates headwinds from options market dynamics. | ||
Parker-Hannifin carries a wide economic moat with operating margins of 17%, a Piotroski F-Score of 7 out of 9, and superior ROE versus peers — demonstrating compounder-quality characteristics in industrial machinery.
→StableQuality breakdown
- Expectation
- Operating margins remain above 15% and ROE stays above peer median for at least 4 consecutive quarters.
CounterFree cash flow conversion at 80% of net income falls short of the highest-quality peers, suggesting some earnings are not being fully converted to cash.
Parker-Hannifin beat earnings estimates in all 4 of the last 4 quarters with an average positive surprise of 7.2%, reflecting disciplined cost management and pricing power across industrial cycles.
↓DeterioratingEarnings
- Expectation
- Earnings beat streak extends to 6 quarters with average quarterly surprise remaining above 5%.
CounterThe most recent beat was only 4.4%, the smallest in the streak, potentially indicating that consensus expectations have caught up to management's delivery pace.
At a forward P/E of 26.9x and a PEG ratio of 3.59, the stock is expensively valued relative to its growth rate, with current price already at the analyst target implying only 1.1% further upside.
↓DeterioratingValuation breakdown
- Expectation
- Stock earnings growth accelerates to justify current valuation, with next twelve months EPS growth exceeding 15% to bring the PEG ratio below 2.0.
CounterPremium valuation for a wide-moat industrial compounder can persist for years; investors may continue to pay up for the consistency and quality of Parker-Hannifin's business.
News sentiment is positive at +0.70 based on recent coverage, momentum score is 7.4 out of 10, and volume is accumulating with a rising OBV — the stock is in a technical breakout pattern above all major moving averages.
Tripped↑ImprovingSentiment breakdown
- Expectation
- Momentum score remains above 6.5 and the stock holds above its 200-day moving average for 6 consecutive months.
CounterThe stock is above the analyst-estimated max pain level of $690, and a position above max pain often creates headwinds from options market dynamics.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.4 |
| ROA | 6.5 |
| Gross margin | 3.5 |
| Op margin | 9.4 |
| Net margin | 8.5 |
| Current ratio | 4.8 |
| FCF quality | 6.1 |
| Moat | 6.9 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 25%
- ▸Strong margins: 17%
- ▸Strong Piotroski F-Score: 8/9
Growth
5.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.0 |
| EPS growth | 5.9 |
Momentum
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 3.2 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+1.1%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 7.5 |
| Price target | 8.1 |
- ▸Analyst upside: 24%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Insider selling (low materiality) — $18,571,467 (0.016% of mkt cap)
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.8 |
| quality rank | 8.4 |
| growth rank | 5.4 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.3 |
| support resistance | 5.1 |
| 52w position | 6.9 |
Risk (lower is worse)
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.4 |
| days to cover | 8.1 |
| volatility | 6.0 |
| put call | 10.0 |
| implied vol | 6.0 |
| max pain risk | 3.0 |
| beta | 6.5 |
| debt equity | 7.6 |
- ▸Above max pain $390
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.5 |
| dividend safety | 6.8 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 5 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:1.8>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.0<4.5
- EARNINGS_PROXIMITY:5d<=7d
Warning (0)
none
Reward-to-Risk
1.82
Upside
+11.7%
Downside
6.5%
Sizing output
AVOID
SetupRange Bound — RSI 41 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.0<4.5, EARNINGS_PROXIMITY:5d<=7d) reinforce the read. Current asymmetry R:R is 1.82 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.4, Risk (lower is worse) at 7.1, and Quality at 7.0; the weakest are Momentum at 4.0, Value at 4.5, and Insider at 5.0. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.82 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat Margin Leadership
Trip ifOperating margin falls below 14% for 2 consecutive quarters, indicating meaningful deterioration from the current 17% level.
- P2Four Quarter Earnings Excellence
Trip ifEarnings miss consensus estimates by more than 5% in the next quarterly report, breaking the 4-quarter beat streak.
- P3Rich Valuation Limited Upside
Trip ifForward P/E expands above 32x without a corresponding increase in earnings growth expectations, signaling valuation risk.
- P4Positive News Sentiment MomentumTripped
Trip ifPrice drops below the 200-day moving average and momentum score falls below 5.5, signaling technical breakdown.