Parker-Hannifin (PH)·Q2 2026 Earnings Summary
Parker Hannifin Smashes Q2 with Record EPS, Raises Full-Year Guidance
January 29, 2026 · by Fintool AI Agent
Parker Hannifin delivered another earnings beat in Q2 FY2026, posting record sales, margins, and adjusted EPS while raising full-year guidance. Revenue of $5.17B exceeded estimates by 2.7%, and adjusted EPS of $7.65 beat consensus by 7.0%. This marks the company's 5th consecutive quarter of outperformance.
The industrial motion and control technology leader also announced the pending acquisition of Filtration Group Corporation, adding to an already strong quarter driven by 13.5% organic growth in Aerospace Systems and continued margin expansion. Order rates accelerated to +9% with backlog reaching a record $11.7 billion.
Did Parker Hannifin Beat Earnings?
Yes — a double beat with record results.
Revenue and EPS estimates from Zacks consensus.
This continues Parker's streak of consistently exceeding expectations. The company has beaten EPS estimates in 8 consecutive quarters with an average beat of ~6%.
Year-over-Year Performance:
- Revenue: +9.1% reported, +6.6% organic
- Adjusted EPS: +17% ($7.65 vs $6.53 prior year)
- Adjusted segment operating margin expanded 150 bps to 27.1%
Ask Fintool AI AgentWhat Did Management Guide?
FY2026 guidance raised across all key metrics.
Q3 FY2026 Outlook:
- Adjusted EPS: ~$7.75
- Sales growth: ~8.5% reported, ~5.0% organic
- Adjusted segment operating margin: ~27.0%
The guidance raise reflects continued momentum in aerospace and improving trends in diversified industrial markets.
What Changed From Last Quarter?
Three key shifts this quarter:
1. Aerospace Continues to Dominate The Aerospace Systems segment delivered another blowout quarter with 14.5% reported growth and 13.5% organic growth. This marks continued double-digit organic growth in aerospace. Commercial OEM surged 26%, aftermarket grew 17%, with double-digit order rates continuing.
2. Diversified Industrial Improving North America diversified industrial returned to positive organic growth (+2.5%), while international organic growth accelerated to +4.6%, led by Asia Pacific at +9.0%. EMEA returned to positive at +2.1% organic.
3. Strategic M&A Announced Parker announced the acquisition of Filtration Group Corporation, expanding aftermarket business and presence in life sciences, HVAC/R, and industrial market verticals. This follows the Curtis Instruments acquisition completed in September 2025.
Segment Performance
Aerospace Systems continues to be the standout performer, with adjusted operating margins expanding to a record 30.2%. The segment benefits from strong commercial aftermarket demand (+17%) and commercial OEM (+26%).
Order Rates & Backlog
Order rates accelerated across all segments, a key forward indicator:
Backlog reached a record $11.7 billion — Aerospace alone has a record $8 billion multi-year backlog. Orders have now outpaced sales for 8 consecutive quarters — the longest such streak in company history — reflecting the portfolio's shift toward longer-cycle businesses and providing improved visibility.
International Regional Performance:
- Asia Pacific: +9.0% organic growth — strength in electronics, semiconductors, mining improvements in China
- Europe (EMEA): +2.0% organic — finally turned positive, driven by trucks, mining, and energy
- Latin America: -3.0% organic (slight weakness)
Regional FY26 Outlook (Raised):
- North America: +2.5% organic (raised from +2%)
- EMEA: +Low single digit (raised from flat)
- Asia Pacific: +Mid single digit (raised from +low single digit)
How Did the Stock React?
PH shares rose ~3.3% in after-hours trading following the earnings release, reaching approximately $946 versus the regular session close of $916.27.
The positive reaction reflects:
- Double beat on revenue and EPS
- Raised full-year guidance
- Continued margin expansion
- Strong aerospace momentum
Valuation context:
- Market cap: ~$116B
- P/E (FY26E): ~30x adjusted EPS
- 52-week range: $488 - $954
- Analyst consensus: "Moderate Buy" with ~$946 average price target
The stock has significantly outperformed the S&P 500, up ~38% over the past 52 weeks versus ~16% for the index.
Ask Fintool AI AgentFinancial Trends (8 Quarters)
Values retrieved from S&P Global. Q2 FY26 results from 8-K.
Capital Allocation & Cash Flow
YTD (6 months) Cash from Operations: $1.64B
Parker continues its disciplined capital allocation:
- Dividends: 69 consecutive years of dividend increases — top 5 longest streak in S&P 500
- Share repurchases: Ongoing program
- M&A: Filtration Group acquisition announced; Curtis Instruments integration proceeding
- Capex: ~$525M expected for FY26
Forward Catalysts
- Filtration Group Acquisition Close — Adds proprietary filtration technologies
- Q3 FY2026 Earnings (early May) — Guidance for ~$7.75 adjusted EPS
- Continued Aerospace Strength — Commercial aftermarket and defense tailwinds
- Margin Expansion — Win Strategy driving operational improvements
- Industrial Recovery — North America returning to growth
Q&A Highlights
On Europe Turning Positive (Andy Kaplowitz, Citi): CEO Jenny Parmentier noted Europe finally turned to positive organic growth (+2%), driven by gradual improvement in transportation (primarily trucks), strength in mining and energy (oil/gas and power gen). "Proposed stimulus and future defense spending is a long-term positive, but not seeing the impact of that this fiscal year."
On Industrial Recovery (Joe Ritchie, Goldman Sachs): Management described the in-plant recovery as "gradual" with customer CapEx remaining "selective" — prioritizing productivity and automation projects versus large-scale capacity expansion. "I don't know that there's just one catalyst to get this short cycle going. It's really a matter of taking out some of the noise... geopolitical noise, tariffs, and maybe possibly interest rates as well."
On Pricing & Tariff Management (Scott Davis, Melius Research): When asked about cost inflation and tariffs, Parmentier emphasized: "That pricing muscle is strong, and we've had a long history here of being able to handle these things... We have to respond to these things and make sure that they don't impact our EPS, and they haven't, and they won't."
On Construction Strength (Steve Tusa, JPMorgan): Contrary to some peers, Parker is seeing actual improvement in construction equipment demand: "It's not just data center stuff... we're actually seeing an increase in the construction equipment."
On Filtration Group Synergies (Brett Linzey, Mizuho): Management expressed high confidence in the $220M synergy target: "Part of our diligence process was several plant visits, and that's what gives us that confidence." While no revenue synergies were modeled, Parmentier sees "opportunities to utilize the customer relationships that we both have to deliver value to customers... upside."
On Industrial Backlog Inflection (Jeffrey Sprague, Vertical Research): A notable development: industrial backlog grew from Q1 to Q2, and orders have outpaced sales for 8 consecutive quarters — the longest such streak in company history. CFO Todd Leombruno noted this provides "better visibility" and allows the company to "level load our operations."
Detailed End Market Outlook (Updated)
Aerospace Sub-Segment Guidance (Updated):
- Commercial OEM: ~20% growth (previously mid-teens)
- Commercial aftermarket: Low double-digit growth (previously high single digit)
- Defense OEM: Mid-single digit growth (unchanged)
- Defense aftermarket: Low single digit growth (previously mid-single digit)
Key Risks
- Aerospace cycle timing and commercial OEM production rates
- Industrial end-market demand variability
- Acquisition integration execution
- Tariff and trade policy uncertainty — though management emphasizes it's "covered"
- Currency headwinds (~1.5% FY26 impact)
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