PARKER CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥34.77B
• Operating Income: ¥3.27B
• Net Income: ¥1.42B
• EPS: ¥98.30

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Parker Corporation (consolidated, JGAAP) reported FY2026 Q2 results with resilient margin expansion despite a slight revenue contraction. Revenue was 34.77 billion yen, down 0.9% YoY, but operating income rose 48.3% YoY to 3.27 billion yen, signaling strong operating leverage and cost discipline. Gross profit was 8.71 billion yen, implying a gross margin of 25.1%, and the operating margin improved to 9.4%, a notable uplift versus the prior year. Ordinary income exceeded operating income at 3.65 billion yen, suggesting incremental non-operating gains, while interest expense remained modest at 72 million yen. Net income surged 84.9% YoY to 2.46 billion yen (EPS 98.30), reflecting both operating improvement and benign below-the-line items. DuPont analysis indicates an ROE of 4.93%, derived from a 7.07% net margin, 0.482x asset turnover, and 1.44x financial leverage; the modest asset turnover and conservative leverage are tempering overall ROE. ROA approximates 3.4%, with a sizable equity base supporting balance sheet resilience. Liquidity remains strong: current ratio 270% and quick ratio 240.6%, supported by 47.90 billion yen of current assets versus 17.74 billion yen of current liabilities. Total liabilities are 22.38 billion yen against total equity of 49.88 billion yen, indicating a conservative capital structure (D/E ~0.45x), and interest coverage is high at 45.5x. Operating cash flow of 1.17 billion yen trails net income (OCF/NI 0.48), pointing to working capital outflows or timing effects that bear monitoring. Investing cash flow is not disclosed in this dataset, so free cash flow cannot be reliably assessed; the reported FCF of 0 reflects non-disclosure rather than true zero. Financing cash flow was an outflow of 0.82 billion yen, likely related to debt service and/or shareholder returns, but the split is not disclosed. The reported equity ratio of 0.0% appears undisclosed; mechanically, equity/asset would be about 69% using the provided totals, underscoring balance sheet strength. Dividend data show 0.00 yen DPS and 0% payout, which likely reflects unreported items at this interim stage rather than an explicit zero dividend policy. Overall, the quarter demonstrates improved profitability and margin quality, underpinned by tight cost control and low financial risk, while cash conversion and working capital movements are the key watch points. Data gaps (notably cash, investing CF, equity ratio disclosure, and share count) limit certain inferences; conclusions are based on available non-zero line items.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 7.07%
• asset_turnover: 0.482
• financial_leverage: 1.44
• calculated_ROE: 4.93%
• commentary: ROE is constrained by modest asset turnover and conservative leverage despite a solid improvement in margins. ROA is approximately 3.4% (7.07% x 0.482). margin_quality:
• gross_margin: 25.1%
• operating_margin: 9.4%
• ordinary_margin: 10.5%
• EBITDA_margin: 11.7%
• drivers: ['YoY revenue declined slightly (-0.9%), yet operating income rose sharply (+48.3%), indicating mix/cost improvements.', 'Ordinary income above operating income implies favorable non-operating items (e.g., financial/other income), with minimal interest burden.', 'Tax expense is reported, but the effective tax rate field shows 0.0% due to non-disclosure; implied taxation from NI suggests a normalizing rate rather than zero.'] operating_leverage: High positive operating leverage evidenced by a 48.3% increase in operating income on a 0.9% revenue decline, pointing to sustained cost discipline and/or improved product mix. Monitoring whether this uplift is structural is key for forward margins.

Growth Assessment

revenue_sustainability: Revenue decreased by 0.9% YoY to 34.77 billion yen, indicating stable but slightly softer top-line conditions. The ability to hold pricing/mix while volumes are flat-to-down appears supportive. profit_quality: Operating income growth (+48.3% YoY) outpaced revenue, reflecting efficiency gains. Ordinary income benefited from non-operating items. Net income rose 84.9% YoY, magnified by below-the-line tailwinds and lean financing costs. outlook: If the margin gains stem from structural cost optimization and favorable mix, profitability can remain robust even in a flat growth environment. Key risks to sustainability include normalization of non-operating gains, potential input cost volatility, and demand softness. Limited disclosure on segmental drivers constrains visibility.

Financial Health

liquidity:

• current_ratio: 270.0%
• quick_ratio: 240.6%
• working_capital: 30,156,000,000
• commentary: Strong liquidity headroom; current assets (47.90bn) comfortably cover current liabilities (17.74bn). solvency:
• total_assets: 72,069,000,000
• total_liabilities: 22,375,000,000
• total_equity: 49,881,000,000
• debt_to_equity: 0.45x (using total liabilities as a proxy for debt due to lack of breakdown)
• interest_coverage: 45.5x
• equity_ratio_note: The reported equity ratio of 0.0% reflects non-disclosure; a mechanical equity/asset ratio is roughly 69% (=49.88bn/72.07bn), indicating low leverage. capital_structure: Balance sheet is conservatively financed with ample equity. Interest expense is low (72m), suggesting limited reliance on costly debt.

Cash Flow Quality

earnings_quality: OCF/NI is 0.48 (1.17bn OCF vs 2.46bn NI), indicating weaker cash conversion this period, likely due to working capital build and/or timing effects. FCF_analysis: Investing cash flow is undisclosed in this dataset; the reported FCF of 0 denotes non-disclosure rather than actual zero. Without capex detail, true FCF cannot be calculated. working_capital: Inventories are 5.21bn; combined with strong liquidity, the company appears to be carrying adequate buffer. The gap between NI and OCF suggests a temporary increase in receivables and/or inventory or reduced payables.

Dividend Sustainability

payout_ratio_assessment: EPS is 98.30, but payout ratio is shown as 0.0% due to non-disclosure. There is insufficient data to determine a current payout level. FCF_coverage: Not assessable; investing cash flows are not disclosed. OCF is positive but below NI, which would tighten coverage if capex were elevated. policy_outlook: Given the strong balance sheet and modest financing costs, capacity for shareholder returns exists. However, lack of disclosed DPS and FCF details prevents assessment of policy consistency or sustainability.

Risk Assessment

Business Risks:

• Top-line softness (-0.9% YoY) may persist if end-market demand remains tepid.
• Margin normalization risk if recent operating leverage gains are partially one-off or tied to non-recurring cost savings.
• Potential input cost and supply chain volatility impacting gross margin.
• FX fluctuations affecting ordinary income and import/export competitiveness.
• Customer concentration risk and pricing pressure (not disclosed, but common for industrial/commerce businesses).

Financial Risks:

• Weaker cash conversion (OCF/NI 0.48) suggests sensitivity to working capital swings.
• Visibility on capex and investing cash flows is limited, obscuring FCF and funding needs.
• Potential reliance on non-operating gains to bridge earnings above EBIT (ordinary > operating).
• Disclosure gaps (cash balance, equity ratio, share count) limit transparency and could mask interim volatility.

Key Concerns:

• Sustainability of elevated operating margins in a flat revenue environment.
• Normalization of non-operating gains that supported ordinary and net income.
• Working capital management and recovery of cash conversion in upcoming quarters.

Investment Implications

Key Takeaways:

• Strong margin-driven profit growth despite slight revenue decline.
• Conservative balance sheet with low effective leverage and high interest coverage.
• Cash conversion lagged earnings; need to see OCF catch up to NI.
• Non-operating gains contributed to ordinary income; durability uncertain.
• Data gaps (investing CF, cash, equity ratio disclosure, dividends) constrain FCF and payout analysis.

Metrics to Watch:

• OCF/Net income ratio and working capital trends (receivables, inventories, payables).
• Capex and investing cash flows to establish true FCF.
• Operating margin sustainability and gross margin trajectory.
• Ordinary income composition (FX, investment income vs. recurring financial income).
• Equity/asset ratio disclosure and any changes in leverage or interest expense.
• Dividend announcements and payout policy clarity.

Relative Positioning: Within peers, Parker appears to be operating with stronger-than-average balance sheet resilience and improving profitability, but with weaker near-term cash conversion and limited disclosure on investing activities and shareholder returns.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis