01—Abstract
Summary
Summary of the 8-K filed August 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Parker-Hannifin reported record fiscal 2026 fourth-quarter and full-year results.
Q4 sales rose 9.8% to a record $5.76 billiona, with organic growth of 8.0%. GAAP diluted EPS increased 19% to $8.54, and adjusted EPS increased 21% to a record $9.27. Adjusted segment operating margin was 28.0% for the quarter, up 110 bps.
Full-year sales reached a record $21.5 billionb (+8.3%, organic +6.6%), and adjusted EPS rose 18% to $32.31. Cash flow from operations was a record $4.4 billion, and the company returned nearly $2 billion to shareholders. Q4 results include an $84 million one-time reduction in cost of sales from IEEPA tariff refunds, which added roughly $0.65 to adjusted-excluded EPS.
The adjusted figures exclude this benefit, so investors should look at adjusted results with that in mind. For fiscal 2027, management guided to reported and organic sales growth of 5.5% to 8.5%, GAAP EPS of $30.00 to $31.00c, and adjusted EPS of $34.25 to $35.25 (about 6% to 9% growth over FY26 adjusted EPS). This guidance excludes the pending acquisitions of Filtration Group and CIRCOR's Commercial and Defense Aerospace business.
Management raised its FY31 adjusted segment operating margin target by 300 bps to 30% and reiterated targets of 4% to 6% organic growth, a 17% free cash flow margin, and greater than 10% adjusted EPS growth. Demand indicators were strong, with Q4 orders up 19% and record backlog of $12.8 billiond. The company is also changing its order-rate methodology to a 12-month rolling basis beginning in FY27, which will affect comparability with prior reported order figures.
Overall, the filing shows strong execution, expanding margins, and rising backlog, supported by a broadening industrial recovery and an aerospace segment at record levels. Risks include the one-time nature of the tariff benefit, integration of pending and recent acquisitions, the reliance on non-GAAP measures, and exposure to macroeconomic, trade-policy, and geopolitical factors noted in the forward-looking statements.
02—Key points
Key Highlights
- Q4 FY26 sales rose 9.8% to a record $5.76 billion (organic +8.0%); GAAP diluted EPS rose 19% to $8.54 and adjusted EPS rose 21% to a record $9.27.
- Full-year FY26 sales reached a record $21.5 billion (+8.3%, organic +6.6%); adjusted EPS increased 18% to $32.31, while GAAP EPS rose 5% to $28.48.
- Q4 adjusted segment operating margin was 28.0% (+110 bps); Aerospace Systems adjusted margin reached 29.8% and International Diversified Industrial reached a record 26.8%.
- FY27 guidance: 5.5% to 8.5% sales growth, GAAP EPS of $30.00 to $31.00, and adjusted EPS of $34.25 to $35.25; guidance excludes pending acquisitions.
- Adjusted segment operating margin target raised 300 bps to 30% by FY31, with reiterated targets of 4% to 6% organic growth, 17% FCF margin, and >10% adjusted EPS growth.
- Record backlog of $12.8 billion and Q4 orders up 19%, with growth in all segments; Aerospace backlog reached a record $8.5 billion.
- Q4 results include an $84 million one-time tariff refund benefit (IEEPA), which is excluded from adjusted figures; the company also returned nearly $2 billion to shareholders and raised its dividend 11%, marking 70 consecutive years of increases.
03—Questions
Frequently Asked Questions
How much of Q4 earnings growth came from the one-time tariff refund?
The company recognized an $84 million reduction to cost of sales from IEEPA tariff refunds in Q4 FY26, equal to about $0.65 per diluted share. GAAP EPS of $8.54 includes this benefit, while adjusted EPS of $9.27 excludes it. Management says the item is discrete and not expected to recur, though it has applied for additional, smaller refunds for which no receivable has been recorded.
What does the FY27 guidance imply for earnings growth?
Guided GAAP EPS of $30.00 to $31.00 compares with FY26 GAAP EPS of $28.48, implying roughly 5% to 9% growth. Adjusted EPS guidance of $34.25 to $35.25 compares with FY26 adjusted EPS of $32.31, implying about 6% to 9% growth. Guidance excludes the pending Filtration Group and CIRCOR C&D Aerospace acquisitions, so results could change materially if those deals close.
Why is the company changing its order-rate reporting?
Beginning in FY27, Parker will calculate all order-rate comparisons on a rolling 12-month basis, replacing the prior 3-month average for Diversified Industrial and the rolling 12-month average for Aerospace. Management says this method correlates more closely with near-term organic growth given the company's higher aerospace and longer-cycle mix. Restated figures show Q4 FY26 rolling 12-month orders at +12% for Parker, versus +19% under the prior methodology, so investors should compare figures on a consistent basis.
Are the margin targets credible and what drives them?
The company has already surpassed its prior 27% adjusted segment margin target, reaching 27.3% for FY26. Q4 adjusted segment margin was 28.0%. Management attributes the expansion to the mix shift toward Aerospace Systems (adjusted margin 29.9% for FY26), operational execution under The Win Strategy, and accretive acquisitions. FY27 guidance of 27.5% to 27.9% adjusted margin implies continued progress toward the 30% FY31 target, though realizing it depends on sustained volume growth and integration of recent deals.
How strong is the balance sheet and cash generation?
FY26 operating cash flow was a record $4.4 billion (20.3% of sales), up from $3.8 billion in FY25. Long-term debt declined to $6.8 billion from $7.5 billion, and total debt including current maturities was about $8.5 billion at June 30, 2026. Cash used for acquisitions was $1.0 billion (Curtis Instruments), and shareholder returns totaled nearly $2 billion. Goodwill and intangibles together represent about 60% of total assets, which increases exposure to future impairment if acquired businesses underperform.
04—Continue