Parker-Hannifin (PH) is making a big bet on aerospace. The company announced Thursday it's buying CIRCOR International's Commercial and Defense Aerospace business from KKR (KKR) for $2.55 billion in cash. The deal includes expected tax benefits worth about $75 million in net present value, so the net price is a bit lower.

On a net basis, the price works out to about 22.7 times CIRCOR Aerospace's estimated 2026 adjusted EBITDA. But if you factor in projected cost synergies—around 10% of 2026 sales—the multiple drops to 18.2 times. That's a pretty reasonable price for a business with strong margins and a solid customer base.

The acquisition is all about flight-critical systems: motion and flow control for commercial and defense aircraft. Parker says the business will generate about $270 million in sales in calendar 2026, with adjusted EBITDA margins above 40% before any synergies. About 80% of its revenue comes from original equipment manufacturers, split evenly between commercial and defense. That's a nice, diversified mix.

Parker expects the deal to close in the second half of 2026, pending regulatory and other approvals. As of March 31, the company had $476 million in cash on hand, so it's not exactly swimming in liquidity, but the deal is structured as all-cash. Parker says the acquisition will be immediately accretive to revenue growth, EBITDA margins, adjusted earnings per share, and cash flow.

Speaking of earnings, Parker just reported a solid quarter. Adjusted EPS came in at $8.17, beating the $7.83 estimate, on sales of $5.486 billion—also ahead of expectations and up 11% year over year, with 6.5% organic growth. The company raised its full-year 2026 guidance: GAAP EPS now expected at $27.10 (up from a range of $26.26–$26.86), and adjusted EPS at $31.20 (up from $30.40–$31.00). Sales guidance was narrowed to about $21.240 billion.

Analysts are bullish on the stock. The consensus rating is Buy, with an average price target of $1,057.83. Recent moves include JPMorgan lowering its target to $1,060 (still Overweight) on May 7, and Citigroup raising its target to $1,141 on May 1, then to $1,137 on April 13.

One thing to watch: Parker-Hannifin is a big holding in a few ETFs, which means passive flows can move the stock. For instance, the Motley Fool Global Opportunities ETF (TMFG) has a 5.39% weight in PH, the Global X Variable Rate Preferred ETF (PFFV) has 3.14%, and the Castellan Targeted Income ETF (CTIF) has 6.76%. If those funds see significant inflows or outflows, Parker's stock could get an automatic push.

As of Thursday's publication, Parker-Hannifin shares were up 0.78% at $866.14. So despite the big acquisition announcement, the market seems to be taking it in stride.