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PH's Aerospace Systems organic sales rose 12% in Q3, driven by OEM and aftermarket demand.
Fiscal 2025 Aerospace sales are projected to grow 12% on air transport and defense market strength.
PH targets 4-6% revenue growth by FY29, aided by acquisitions, CapEx reinvestment and its Win strategy.
Parker-Hannifin Corporation (PH - Free Report) is benefiting from strong momentum in the Aerospace Systems segment, driven by strength in the commercial and military end markets across both OEM and aftermarket channels. The segment’s organic revenues increased approximately 12% year over year in the third quarter of fiscal 2025 (ended March 2025). In the quarters ahead, the Aerospace Systems segment is likely to gain from strong demand for its products and aftermarket support services in the general aviation market, driven by growth in air transport activities. Strength in its defense end market, arising from stable U.S. and international defense spending volumes, is also likely to be beneficial. Parker-Hannifin expects the Aerospace Systems segment’s organic sales to increase about 12% from the year-ago level in fiscal 2025 (ending June 2025).
Parker-Hannifin solidified its product portfolio and leveraged business opportunities through asset additions. In September 2022, the company completed the acquisition of Meggitt plc, a global leader in motion and control technologies. The acquisition expanded Parker-Hannifin’s presence in the United Kingdom, positioning it well to provide a broader suite of solutions for aircraft and aero-engine components and systems.
The company has doubled its portfolio of aerospace, filtration and engineered materials in the past eight years. Also, it is strategically shifting toward longer-cycle products (to attain stable and predictable revenue streams) supported by secular growth trends, which is improving its revenue mix. The growth drivers, i.e., the Win strategy, macro-CapEx reinvestment (a strategy of reinvesting capital expenditures into a company's operations, assets and growth initiatives), acquisitions and secular growth trends, are likely to help Parker-Hannifin achieve 4-6% revenue growth by fiscal 2029. The company also expects to increase its earnings by more than 10% per share (CAGR) and is set to achieve a 27% adjusted segment operating margin by fiscal 2029. It is worth noting that PH reported an adjusted segment operating margin of 26.3% in the third quarter, up 160 bps from the year-ago period.
The company is committed to rewarding its shareholders through dividends. In April 2025, PH hiked its dividend by 10% to $1.80 per share (annually: $7.20). In the first nine months of fiscal 2025, Parker-Hannifin rewarded its shareholders with dividends of $630.2 million, up 10.3%. PH repurchased shares worth $750 million in the same period.
Price Performance of PH
In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 5.6% compared with the industry’s 0.6% growth.
Image Source: Zacks Investment Research
Headwinds Plaguing PH
The company is plagued by weakness across the Diversified Industrial segment. Challenging conditions in the off-highway end market, due to softness in the construction and agricultural sectors, have been affecting both the North America and international businesses of the segment. Also, softness in the transportation end market, arising from lower demand for automotive cars, is ailing the North America and international businesses. Headwinds in the energy end market, owing to reduced capital spending and lower oil prices, are concerning as well.
Parker-Hannifin intends to boost its revenues and profitability through overseas business expansion. However, this exposes the company's financial performance to various risks like political, environmental and foreign currency exchange rate fluctuations. In the third quarter, foreign currency translation lowered sales by approximately 1%. Foreign currency headwinds are expected to adversely affect the company’s top line by 0.5% in fiscal 2025.
FERG delivered a trailing four-quarter average earnings surprise of 4.8%. In the past 60 days, the Zacks Consensus Estimate for Ferguson’s fiscal 2025 earnings has increased 7%.
Broadwind, Inc. (BWEN - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 61.1%.
In the past 60 days, the consensus estimate for BWEN’s 2025 earnings has increased 14.3%.
The Gorman-Rupp Company (GRC - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 2.4%.
The Zacks Consensus Estimate for GRC’s 2025 earnings has increased a penny in the past 60 days.
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Parker-Hannifin Exhibits Strong Prospects Despite Persisting Headwinds
Key Takeaways
Parker-Hannifin Corporation (PH - Free Report) is benefiting from strong momentum in the Aerospace Systems segment, driven by strength in the commercial and military end markets across both OEM and aftermarket channels. The segment’s organic revenues increased approximately 12% year over year in the third quarter of fiscal 2025 (ended March 2025). In the quarters ahead, the Aerospace Systems segment is likely to gain from strong demand for its products and aftermarket support services in the general aviation market, driven by growth in air transport activities. Strength in its defense end market, arising from stable U.S. and international defense spending volumes, is also likely to be beneficial. Parker-Hannifin expects the Aerospace Systems segment’s organic sales to increase about 12% from the year-ago level in fiscal 2025 (ending June 2025).
Parker-Hannifin solidified its product portfolio and leveraged business opportunities through asset additions. In September 2022, the company completed the acquisition of Meggitt plc, a global leader in motion and control technologies. The acquisition expanded Parker-Hannifin’s presence in the United Kingdom, positioning it well to provide a broader suite of solutions for aircraft and aero-engine components and systems.
The company has doubled its portfolio of aerospace, filtration and engineered materials in the past eight years. Also, it is strategically shifting toward longer-cycle products (to attain stable and predictable revenue streams) supported by secular growth trends, which is improving its revenue mix. The growth drivers, i.e., the Win strategy, macro-CapEx reinvestment (a strategy of reinvesting capital expenditures into a company's operations, assets and growth initiatives), acquisitions and secular growth trends, are likely to help Parker-Hannifin achieve 4-6% revenue growth by fiscal 2029. The company also expects to increase its earnings by more than 10% per share (CAGR) and is set to achieve a 27% adjusted segment operating margin by fiscal 2029. It is worth noting that PH reported an adjusted segment operating margin of 26.3% in the third quarter, up 160 bps from the year-ago period.
The company is committed to rewarding its shareholders through dividends. In April 2025, PH hiked its dividend by 10% to $1.80 per share (annually: $7.20). In the first nine months of fiscal 2025, Parker-Hannifin rewarded its shareholders with dividends of $630.2 million, up 10.3%. PH repurchased shares worth $750 million in the same period.
Price Performance of PH
In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 5.6% compared with the industry’s 0.6% growth.
Image Source: Zacks Investment Research
Headwinds Plaguing PH
The company is plagued by weakness across the Diversified Industrial segment. Challenging conditions in the off-highway end market, due to softness in the construction and agricultural sectors, have been affecting both the North America and international businesses of the segment. Also, softness in the transportation end market, arising from lower demand for automotive cars, is ailing the North America and international businesses. Headwinds in the energy end market, owing to reduced capital spending and lower oil prices, are concerning as well.
Parker-Hannifin intends to boost its revenues and profitability through overseas business expansion. However, this exposes the company's financial performance to various risks like political, environmental and foreign currency exchange rate fluctuations. In the third quarter, foreign currency translation lowered sales by approximately 1%. Foreign currency headwinds are expected to adversely affect the company’s top line by 0.5% in fiscal 2025.
Stocks to Consider
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Ferguson Enterprises Inc. (FERG - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FERG delivered a trailing four-quarter average earnings surprise of 4.8%. In the past 60 days, the Zacks Consensus Estimate for Ferguson’s fiscal 2025 earnings has increased 7%.
Broadwind, Inc. (BWEN - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 61.1%.
In the past 60 days, the consensus estimate for BWEN’s 2025 earnings has increased 14.3%.
The Gorman-Rupp Company (GRC - Free Report) presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 2.4%.
The Zacks Consensus Estimate for GRC’s 2025 earnings has increased a penny in the past 60 days.