Why Parker-Hannifin Rallied 38.2% in 2025

Shares of industrial giant Parker-Hannifin Corporation (NYSE: PH) rallied 38.2% in 2025, according to data from S&P Global Market Intelligence.

Parker-Hannafin sells motion control equipment and valves across several general industrial applications and the aerospace industry.

In 2025, its industrial segments were somewhat mixed, but the aerospace segment, the company's largest, "took off," so to speak, leading to margin expansion and a series of earnings beats.

Additionally, Parker-Hannafin made two acquisitions last year, including the $1 billion acquisition of Curtis Instruments and the larger $9.25 billion acquisition of Filtration Group.

Parker-Hannifin recovers from "Liberation Day"

The year started off poorly for Parker Hannifin, as the controversial "Liberation Day" tariffs threatened all industrial businesses worldwide. However, fears over tariffs were soon allayed, as Parker management increased prices during the year and streamlined costs, boosting margins even though revenue was challenged in the general industrial segment.

Parker has been an active acquirer of businesses and a consolidator in the motion control industrial space. The past year's results were driven by the successful integration of aerospace company Meggitt PLC, which Parker bought for approximately $7.3 billion back in September of 2022. In fiscal 2025, which ended on June 30, Parker's aerospace division grew 13% and expanded operating margins by 300 basis points, thanks to continued cost synergies from that deal. That was enough to offset the 3% decline in the general industrial segment, outside of divestitures.

And Parker's good results continued in the first fiscal quarter of 2025, in which Parker accelerated revenue growth to 3.7%, or 5% when factoring in divestitures. Margins continued to expand, with adjusted earnings per share growing at a higher 16% pace. As a result of the strong results, management raised full-year guidance to 6.5% revenue growth, up from a prior guide of 3.5%, while raising the full-year adjusted EPS outlook from $28.90 to $30.00 per share.

Because Parker has experience and past success in integrating acquisitions, the market also applauded the $1 billion acquisition of Curtis Instruments, which makes control and power devices for the electric vehicle motor industry, as well as the $9.25 billion acquisition of Filter Group, which makes industrial filtration systems across a variety of industrial applications. The Filter acquisition also exposes Parker to the food protection and healthcare segments, where it did not previously have a presence.

Image source: Getty Images.

Parker is a high-performing company, but at a price

Parker-Hannifin is a high-performing company with the strategy of applying its "Win 3.0" business excellence strategy to new acquisitions. In 2025, the consolidator-rollup strategy proved itself in a difficult macroeconomic environment, further enthusing investors.

Currently, shares trade for 33 times earnings, which is the high end of the valuation range Parker has traded for over the past decade. So while 2025's big gains may make Parker fairly valued to over-valued, it's a high-quality name all investors in industrial stocks should have on their radar, in case of any material pullbacks.

Billy Duberstein and/or his client has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.