Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Parker-Hannifin Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 7.2% to 8.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 63, DPO 58, DIO 78). At a 8.7% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $575.23 per share, suggesting PH is overvalued by 36.6% at the current price of $906.85.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,373 | 3,631 | 3,839 | 4,291 | 4,654 | 4,771 |
| (−) Net Interest | 467 | 502 | 531 | 594 | 644 | 660 |
| (+) D&A | 331 | 367 | 404 | 416 | 435 | 446 |
| EBITDA | 4,171 | 4,500 | 4,774 | 5,302 | 5,733 | 5,877 |
| (−) Tax | 660 | 710 | 751 | 840 | 911 | — |
| (−) CapEx | 388 | 417 | 441 | 493 | 535 | — |
| (−) ΔWC | 373 | 341 | 275 | 599 | 480 | — |
| Free Cash Flow (FCF) | 2,750 | 3,031 | 3,307 | 3,370 | 3,808 | — |
| Peers' EBITDA Multiple | 18.3x | |||||
| Terminal Value | 107,659 | |||||
| WACC / Discount Rate | 8.71% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,638 | 2,674 | 2,684 | 2,516 | 2,615 | 70,923 |
| Enterprise Value | 84,049 | |||||
| Projection Period | 13,126 | 15.6% | ||||
| Terminal Value | 70,923 | 84.4% | ||||
| (−) Current Net Debt | 9,173 | |||||
| Equity Value | 74,876 | |||||
| (÷) Outstanding Shares | 130M | |||||
| Fair Price | $575 | -36.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.3x | 16.3x | 18.3x | 20.3x | 22.3x |
|---|---|---|---|---|---|
| 6.7% | $503 | $568 | $633 | $698 | $764 |
| 7.7% | $479 | $541 | $603 | $666 | $728 |
| 8.7% | $456 | $516 | $575 | $635 | $694 |
| 9.7% | $435 | $492 | $549 | $605 | $662 |
| 10.7% | $415 | $469 | $523 | $578 | $632 |
Current price: $906.85. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.