Parker-Hannifin shares climb on record sales, stronger FY26 guidance
Motion and control technologies company delivers 17% EPS growth, boosts dividend as backlog hits $11.7bn
Parker-Hannifin Corporation shares advanced in early trading Thursday after the industrial components maker reported fiscal second-quarter earnings that beat analyst expectations and raised its full-year guidance on record sales and margin expansion.
The Ohio-based manufacturer posted adjusted earnings per share of $7.65 for the quarter ended December 31, 2025, surpassing the $7.17 consensus estimate by 6.8%. Adjusted EPS increased 17% year-over-year, while reported EPS was $6.60. Revenue climbed 9% to a record $5.2 billion, exceeding analyst projections of $5.07 billion.
The strong results prompted management to lift its fiscal 2026 guidance across all metrics. The company now expects sales growth between 5.5% and 7.5%, with organic growth of approximately 5% at the midpoint. Adjusted EPS guidance was raised to a range of $30.40 to $31.00, while reported EPS is projected between $26.26 and $26.86.
Operating margins showed significant improvement across all business segments. Overall segment operating margin reached 23.9%, up 180 basis points from the prior year, while adjusted segment operating margin of 27.1% represented a 150-basis-point increase. The Aerospace Systems segment delivered the highest adjusted margin at 30.2%, jumping 200 basis points.
"Record sales and segment operating margin drove adjusted EPS growth," the company stated in its earnings release, highlighting strength across its diversified portfolio. The Aerospace Systems segment's multi-year backlog increased to a record $8 billion, while total company backlog reached $11.7 billion, providing visibility into future revenue streams.
Shareholders will also receive a larger dividend, with the board increasing the quarterly payout to $1.80 per share from $1.63 in the prior-year period. The company's commitment to returning capital comes alongside its aggressive growth targets.
Parker-Hannifin's performance reflects broader strength in the industrial sector, particularly in aerospace and automation markets. The company's motion and control technologies serve a wide range of industries including aerospace, industrial automation, and automotive, positioning it to benefit from ongoing secular trends in manufacturing modernization and defense spending.
Analysts remain largely bullish on the stock, with 18 of 25 analysts surveyed rating it a buy or strong buy, according to market data. The consensus price target stands at $965.74, representing potential upside from current levels around $916.
The company's shares have been volatile over the past 12 months, trading in a range between $484.86 and $954.30. Despite the recent pullback from 52-week highs, the stock has outperformed many industrial peers amid the ongoing recovery in manufacturing activity.
Looking ahead, investors will focus on Parker-Hannifin's ability to maintain margin expansion amid potential inflationary pressures and mixed signals from global economic growth. The company's record backlog provides a cushion, but execution on operational efficiency initiatives will be critical to sustaining the momentum demonstrated in the second quarter.
The next major catalyst will come when the company reports third-quarter results, where analysts will look for evidence that the raised guidance is achievable and that margin improvements are sustainable across the business cycle.