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Eaton Corp PLC ETN

Morningstar Rating
$287.88 +0.87 (0.30%)
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Company Report

Eaton Earnings: Margin Improvement Continues; Solid Demand Backdrop in 2024

Narrow-moat-rated Eaton posted another impressive quarter of revenue growth and margin expansion to close out 2023, and the market appeared to be pleased, as the stock rallied over 7% on Feb. 1. Revenue of $6.0 billion and adjusted earnings per share of $2.55 both surprised to the upside relative to FactSet consensus estimates and were slightly above what we had originally baked in. Segment operating margin was up a full 200 basis points to 22.8% for the quarter. Given Eaton’s sustained margin performance and healthy growth outlook, we have raised our fair value estimate to $210 per share from $208.

Price vs Fair Value

ETN is trading at a 37% premium.
Price
$286.96
Fair Value
$155.00
Uncertainty
Medium
1-Star Price
$841.10
5-Star Price
$923.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Eaton’s portfolio moves could create value for shareholders and transform the firm from a 10% ROIC generator to one in the mid- to upper teens.

Bears

While Eaton has traditionally traded at a discount to peers, its return profile is worse than those peers'.

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News

Trading Information

Previous Close Price
$287.01
Day Range
$285.88288.85
52-Week Range
$155.38288.85
Bid/Ask
$287.76 / $288.20
Market Cap
$114.83 Bil
Volume/Avg
375,322 / 1.6 Mil

Key Statistics

Price/Earnings (Normalized)
33.29
Price/Sales
4.96
Dividend Yield (Trailing)
1.20%
Dividend Yield (Forward)
1.20%
Total Yield
1.20%

Company Profile

Eaton is a diversified power management company operating for over 100 years. The company operates through various segments, including electrical Americas, electrical global, aerospace, vehicle, and eMobility. Eaton’s portfolio can broadly be divided into two halves. One part of its portfolio is housed under its industrial sector umbrella, which serves a large variety of end markets like commercial vehicles, general aviation, and trucks. The other portion is Eaton’s electrical sector portfolio, which serves data centers, utilities, and the residential end market, among others. While the company receives favorable tax treatment with its Ireland domicile, most of its operations are in the U.S.
Sector
Industrials
Industry
Specialty Industrial Machinery
Stock Style Box
Large Core
Total Number of Employees
92,000

Competitors

Valuation

Metric
ETN
ABBN
CMI
Price/Earnings (Normalized)
33.2920.3813.87
Price/Book Value
6.026.604.33
Price/Sales
4.962.601.13
Price/Cash Flow
31.3518.9324.92
Price/Earnings
ETN
ABBN
CMI

Financial Strength

Metric
ETN
ABBN
CMI
Quick Ratio
0.840.800.65
Current Ratio
1.451.181.18
Interest Coverage
22.3717.774.70
Quick Ratio
ETN
ABBN
CMI

Profitability

Metric
ETN
ABBN
CMI
Return on Assets (Normalized)
9.66%9.21%2.59%
Return on Equity (Normalized)
19.90%28.61%8.41%
Return on Invested Capital (Normalized)
13.39%16.80%4.90%
Return on Assets
ETN
ABBN
CMI
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Specialty Industrial Machinery Industry Comparables

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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
GE
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SIEGY
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ITW
Illinois Tool Works IncBlswdhh$78.5 Bil
PH
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EMR
Emerson Electric CoBvqlj$60.3 Bil
OTIS
Otis Worldwide Corp Ordinary SharesXnsk$38.5 Bil
CMI
Cummins IncKmjfyd$38.4 Bil
IR
Ingersoll Rand IncWtcdfqh$36.2 Bil
ROK
Rockwell Automation IncVcx$32.8 Bil

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