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Parker-Hannifin Corporation (PH) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Parker-Hannifin Corporation (PH)

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Intrinsic Value (DCF)

Current$938.35
→
Intrinsic$873.46
-7%
$561.32$873.46$1,493.71
Market implies 26% growth for 5 years
PH appears fairly valued — current price aligns with our DCF estimate.
At $938, the market prices in continued strong cash flow growth (26%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $561 → Bull $1494. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →20%22%24%26%
8%$1124$1222$1325$1436
10%$740$805$873$946
12%$538$585$635$689
14%$414$450$489$530

Bull Case

  • Bull case ($1494) offers 59% upside at 29% growth, 8% discount

Bear Case

  • Bear case ($561) implies 40% downside at 19% growth, 12% discount
  • Using 24% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$4.14B
Year 2$5.13B
Year 3$6.35B
Year 4$7.87B
Year 5$9.75B
Terminal$154.55B

📐 Model Inputs

Growth Rate23.9%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.34BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is PH stock undervalued or overvalued?
🔴 OVERVALUED

PH trades at $938.35 vs. our DCF-derived intrinsic value of $599.24, implying -35% downside. Using a 9.5% WACC and 23.9% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($922.43) suggests limited upside.

What is PH's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.34B, projected at 23.9% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $9.02B net debt and dividing by 0.13B shares: Bear $378.75 | Base $599.24 | Bull $922.43. Current price $938.35 implies -35% to base case.

How is PH's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 23.9% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($87.04B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.