Parker-Hannifin Raises Margin Target as Organic Growth Accelerates
Adjusted segment operating margin reached 28.0%, expanding 110 basis points from a year earlier.
Parker-Hannifin Corporation (PH), the motion-and-control products maker, ended fiscal 2026 with fourth-quarter sales up 9.8% to $5.755 billion as organic growth accelerated to 8.0% from 6.5% in the preceding quarter and 2% a year earlier.
The quarter extended a yearlong improvement in industrial demand and profitability. Parker finished fiscal 2026 above its third-quarter outlook, posting 8.3% sales growth, 6.6% organic growth and adjusted EPS of $32.31.
Fourth-quarter net income rose 18% to $1.092 billion. Adjusted net income increased 20% to $1.186 billion, while adjusted EPS climbed 21% to $9.27, accelerating from 18% growth in the third quarter.
Industrial demand strengthened across Parker's two geographic segments. North American organic growth accelerated to 4.9% from 2.8% sequentially, while international organic growth reached 6.5%, up from 3.3%, as international sales rose 9.5% to $1.634 billion.
Asia-Pacific led the international advance with 15.9% organic growth, compared with 9.6% in the third quarter. EMEA grew 0.6%, while Latin America declined 2.6%. North American adjusted segment margin rebounded to a record 27.4%, and international margin expanded 210 basis points to 26.8%.
Parker's fiscal 2027 guidance calls for reported and organic sales growth of 5.5% to 8.5%, adjusted segment margin of 27.5% to 27.9%, and adjusted EPS of $34.25 to $35.25. The EPS range implies growth of roughly 6% to 9% from fiscal 2026. The company also raised its long-term adjusted segment margin target by 300 basis points to 30% by fiscal 2031 after exceeding its previous target.
Full-year operating cash flow increased to a record $4.4 billion, or 20.3% of sales, from $3.8 billion a year earlier. Parker returned nearly $2 billion through repurchases and dividends, raised its annual dividend 11%, completed the Curtis Instruments acquisition and announced agreements for Filtration Group and CIRCOR's commercial and defense aerospace business.
Fourth-quarter reported results included an $84 million reduction in cost of sales from U.S. tariff refunds, equal to $0.65 a share. Parker excluded the nonrecurring benefit from adjusted results and noted that additional, smaller refund claims remained uncertain. Beginning in fiscal 2027, the company will use rolling 12-month comparisons for Diversified Industrial order rates, reducing direct comparability with its earlier three-month disclosures.