Industrial machinery company Parker-Hannifin (NYSE: PH) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 1.1% year on year to $5.24 billion. Its non-GAAP profit of $7.69 per share was 8.6% above analysts’ consensus estimates.

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“Our outstanding performance contributed to a record year for safety, engagement, earnings per share, margins and cash flow,” said Jenny Parmentier, Chairman and Chief Executive Officer.

Company Overview

Founded in 1917, Parker Hannifin (NYSE: PH) is a manufacturer of motion and control systems for a wide variety of mobile, industrial and aerospace markets.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Parker-Hannifin’s sales grew at a decent 7.7% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Parker-Hannifin’s recent performance shows its demand has slowed as its annualized revenue growth of 2% over the last two years was below its five-year trend.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Parker-Hannifin’s organic revenue averaged 1.6% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Parker-Hannifin reported modest year-on-year revenue growth of 1.1% but beat Wall Street’s estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, similar to its two-year rate. While this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.

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Operating Margin

Parker-Hannifin has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 18%. This result isn’t too surprising as its gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Parker-Hannifin’s operating margin rose by 3.9 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q2, Parker-Hannifin generated an operating margin profit margin of 21.3%, up 1.2 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Parker-Hannifin’s EPS grew at an astounding 20.5% compounded annual growth rate over the last five years, higher than its 7.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Parker-Hannifin’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Parker-Hannifin’s operating margin expanded by 3.9 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Parker-Hannifin, its two-year annual EPS growth of 12.8% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q2, Parker-Hannifin reported adjusted EPS at $7.69, up from $6.77 in the same quarter last year. This print beat analysts’ estimates by 8.6%. Over the next 12 months, Wall Street expects Parker-Hannifin’s full-year EPS of $27.36 to grow 6.4%.

Key Takeaways from Parker-Hannifin’s Q2 Results

We enjoyed seeing Parker-Hannifin beat analysts’ revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 1.1% to $722.53 immediately after reporting.

Indeed, Parker-Hannifin had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.