Eaton (ETN) AI Stock Analysis

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Eaton

(NYSE:ETN)

Rating:81Outperform

Price Target:―

Eaton's overall stock score of 81 reflects its strong financial performance, driven by significant revenue growth and profitability. The earnings call supports a positive outlook with record EPS and organic growth, although challenges in certain segments and valuation concerns temper the score. Technical indicators suggest potential for further gains, but caution is advised due to high stochastic levels.

Positive Factors

Data Center Growth

ETN is expected to continue leading the industry, with Data Center revenue up by approximately 50% and an 18% increase in the negotiation pipeline quarter-over-quarter.

Profit Growth Potential

ETN has substantial potential for profit growth with a projected tenfold profit increase on a reshored unit of capital expenditure.

Reshoring Initiative

The US Reshoring initiative is progressing faster than anticipated, positioning ETN as a top beneficiary of this trend.

Negative Factors

BEV Adoption Concerns

With BEV adoption rates tapering, investors may question the relevancy of ETN's Vehicle and eMobility operations to its longer-term growth focus.

Margin Pressure

Margins are expected to see pressure from dollar for dollar pricing actions, with Q2 expected to see most of the impact due to timing lag.

Order Decline Concerns

Eaton's 1Q25 orders are expected to be down year-over-year due to challenging comparisons from a large order in the previous year, not due to a slowdown in the market.

Eaton (ETN) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$127.50B

Dividend Yield1.18%

Average Volume (3M)2.37M

Price to Earnings (P/E)32.9

Beta (1Y)1.38

Revenue Growth7.00%

EPS Growth16.84%

CountryUS

Employees94,443

SectorIndustrials

Sector Strength93

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)2.72

Shares Outstanding391,300,000

10 Day Avg. Volume1,770,197

30 Day Avg. Volume2,371,163

Financial Highlights & Ratios

PEG Ratio7.18

Price to Book (P/B)6.55

Price to Sales (P/S)0.00

P/FCF Ratio36.54

Enterprise Value/Market Cap1.02

Enterprise Value/Revenue1.32

Enterprise Value/Gross Profit13.38

Enterprise Value/Ebitda5.87

Forecast

1Y Price Target

$357.79

Price Target Upside9.59% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering15

Eaton Business Overview & Revenue Model

Company DescriptionEaton Corporation plc (ETN) is a diversified global power management company that provides energy-efficient solutions to help customers effectively manage electrical, hydraulic, and mechanical power more efficiently, safely, and sustainably. With operations across various sectors including electrical products, electrical systems and services, aerospace, hydraulics, and vehicle segments, Eaton is committed to improving the quality of life and the environment through its innovative power management technologies and services.

How the Company Makes MoneyEaton makes money through its diverse range of products and services across its core business segments. The Electrical Products and Electrical Systems and Services segments, which include products like circuit breakers, switchgear, UPS systems, and power distribution units, generate revenue by providing solutions for electrical power distribution and control. The Aerospace segment earns revenue by supplying hydraulic, fuel, and pneumatic systems for commercial and military aircraft, leveraging long-term contracts with major aerospace manufacturers. The Hydraulics segment contributes through the sale of components and systems for industrial and mobile equipment. Meanwhile, the Vehicle segment generates income from drivetrain and powertrain systems and components for automotive and commercial vehicles. Eaton also benefits from strategic partnerships and acquisitions that expand its market reach and product offerings, thereby enhancing its revenue potential.

Eaton Key Performance Indicators (KPIs)

Any

Electrical Americas Revenue by Segment

Electrical Americas Revenue by Segment
Shows revenue from the Electrical Americas segment, highlighting the company's market position and growth opportunities in this region's electrical sector.

Chart InsightsEaton's Electrical Americas segment shows robust growth, particularly in the Systems category, reflecting strong demand and strategic positioning in key markets like data centers. The latest earnings call underscores this momentum, with record EPS and revenue growth driven by a 9% organic sales increase. Despite challenges in other segments, Eaton's focus on expanding its data center capabilities and a solid order backlog positions it well for continued success. Investors should note the company's resilience amid global trade uncertainties and its strategic emphasis on high-growth sectors.

Data provided by:

Main Street Data

Eaton Earnings Call Summary

Earnings Call Date:May 02, 2025

(Q1-2025)

% Change Since: 8.61%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Positive

Eaton's earnings call reflected a strong performance with record EPS and revenue growth, driven by robust demand in key segments like Electrical Americas and Aerospace. The company remains optimistic about long-term opportunities, especially in the data center market. However, challenges persist in the Vehicle segment and from global trade dynamics. Despite these hurdles, Eaton demonstrates a solid foundation for continued growth.

Q1-2025 Updates

Positive Updates

Record Adjusted EPS and Revenue Growth

Eaton reported a Q1 record adjusted EPS of $2.72, up 13% year-over-year, and record quarterly revenue of $6.4 billion, driven by broad strength across many end markets.

Strong Organic Growth and Segment Margins

The company achieved 9% organic sales growth, with notable performance in Electrical Americas and Aerospace segments. Segment margins reached a record 23.9%, an expansion of 80 basis points.

Data Center Market Opportunities

Eaton noted significant opportunities in the data center market, with a U.S. construction backlog of 9 years. The acquisition of Fiber Bond positions Eaton as a key player in rapidly deploying power solutions.

Robust Backlog and Order Book

Eaton reported a book-to-bill ratio of 1.1, with backlog growth both year-over-year and sequentially, providing strong visibility for future growth.

Aerospace Segment Performance

The Aerospace segment posted all-time record sales with organic growth of 13%, driven by strength in military aftermarket and OEM markets.

Negative Updates

Decline in Vehicle Segment Revenue

The Vehicle segment experienced a 15% revenue decline, largely due to weakness in both commercial and ICE light motor vehicles markets in North America.

Impact of Global Trade and Tariffs

The company highlighted uncertainties from the dynamic global trade environment and tariffs, impacting margins and necessitating cost control and pricing actions.

Challenges in Electrical Global Segment

Despite improvement, the Electrical Global segment faced a 2% FX headwind, and orders were flat on a rolling 12-month basis.

Company Guidance

During Eaton's First Quarter 2025 Earnings Conference Call, significant metrics were highlighted, reflecting the company's robust performance and optimistic outlook. Eaton posted a Q1 record adjusted EPS of $2.72, marking a 13% increase from the prior year. Organic growth accelerated to 9%, with Electrical Americas, aerospace, and Electrical Global showing particular strength. The company achieved Q1 record segment margins of 23.9%, aligning with their guidance. Total company orders rose by 3% compared to the previous quarter, resulting in a book-to-bill ratio of 1.1 and backlog growth both year-over-year and sequentially. Eaton increased its expectations for organic growth and reaffirmed its adjusted EPS, cash flow, and share repurchase outlook, setting a strong foundation for the fiscal year 2025.

Eaton Financial Statement Overview

Summary

Eaton's financial statements indicate strong overall financial health with significant revenue growth, high profitability margins, and efficient cash management. The company's income statement shows robust growth and profitability, while the balance sheet is stable with a moderate debt level. The cash flow remains healthy despite a slight decrease in free cash flow growth.

Income Statement

Very Positive

Eaton demonstrates strong financial performance with consistent revenue growth, shown by a revenue increase of 9.17% in the latest period. The company maintains healthy margins with a Gross Profit Margin of 53.96% and a Net Profit Margin of 15.55% for TTM (Trailing-Twelve-Months). The EBIT Margin of 34.89% and EBITDA Margin of 17.23% indicate efficient operations and cost management. Overall, the robust growth trajectory and high profitability metrics suggest a well-managed income statement.

Balance Sheet

Positive

Eaton's balance sheet reflects a stable financial structure with a moderate Debt-to-Equity Ratio of 0.58, indicating balanced leverage use. The Return on Equity (ROE) is strong at 21.23% TTM, demonstrating effective use of equity to generate profits. The Equity Ratio stands at 47.31%, highlighting solid capital positioning. While the company’s financial health is stable, the debt level warrants monitoring to maintain financial resilience.

Cash Flow

Very Positive

Eaton exhibits strong cash flow performance with a Free Cash Flow Growth Rate of -1.53%, showing stability despite a slight decrease. The Operating Cash Flow to Net Income Ratio is 1.04, indicating efficient cash generation relative to profits. The Free Cash Flow to Net Income Ratio at 0.88 reflects strong cash conversion efficiency. Overall, the cash flow statement suggests healthy liquidity and effective cash management.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
25.31B	24.88B	23.20B	20.75B	19.63B	17.86B
	Gross Profit
9.73B	9.50B	8.43B	6.89B	6.33B	5.45B
	EBIT
4.90B	4.63B	3.88B	2.08B	1.50B	863.00M
	EBITDA
5.80B	5.63B	4.90B	3.03B	2.42B	1.67B
	Net Income Common Stockholders
3.94B	3.79B	3.22B	2.46B	2.14B	1.41B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.94B	2.08B	2.61B	555.00M	568.00M	1.10B
	Total Assets
39.21B	38.38B	38.43B	35.03B	34.03B	31.82B
	Total Debt
10.75B	9.82B	9.80B	9.11B	8.92B	8.38B
	Net Debt
8.97B	9.27B	9.31B	8.82B	8.62B	7.95B
	Total Liabilities
20.66B	19.85B	19.36B	17.95B	17.58B	16.85B
	Stockholders Equity
18.51B	18.49B	19.04B	17.04B	16.41B	14.93B
Cash Flow		Free Cash Flow
3.32B	3.52B	2.87B	1.94B	1.59B	2.56B
	Operating Cash Flow
4.09B	4.33B	3.62B	2.53B	2.16B	2.94B
	Investing Cash Flow
929.00M	-271.00M	-2.58B	-1.20B	-1.76B	397.00M
	Financing Cash Flow
-3.64B	-3.94B	-871.00M	-1.34B	-535.00M	-3.26B

Eaton Technical Analysis

Technical Analysis Sentiment

Positive

Last Price326.48

Price Trends

50DMA

296.15

Positive

100DMA

302.26

Positive

200DMA

318.22

Positive

Market Momentum

MACD

7.39

Positive

RSI

61.95

Neutral

STOCH

77.11

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ETN, the sentiment is Positive. The current price of 326.48 is above the 20-day moving average (MA) of 323.69, above the 50-day MA of 296.15, and above the 200-day MA of 318.22, indicating a bullish trend. The MACD of 7.39 indicates Positive momentum. The RSI at 61.95 is Neutral, neither overbought nor oversold. The STOCH value of 77.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ETN.

Eaton Risk Analysis

Eaton disclosed 13 risk factors in its most recent earnings report. Eaton reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 2 New Risks

Technology disruption may impact our stock price and/or negatively impact our end markets. Q4, 2024

Changes in countries' trade policy globally, including imposition of sanctions or tariffs, may have a material adverse impact on our business and results of operations. Q4, 2024

Eaton Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ETN	81 Outperform	$127.50B	32.89	20.84%	1.18%	7.00%	16.84%
ROP	80 Outperform	$61.05B	40.96	8.09%	0.55%	13.34%	1.98%
ITW	79 Outperform	$72.23B	21.66	107.62%	2.39%	-1.85%	12.04%
PH	76 Outperform	$84.94B	25.59	27.16%	1.00%	-0.23%	22.41%
EMR	73 Outperform	$67.72B	28.73	9.82%	1.73%	6.49%	24.14%
ROK	68 Neutral	$35.69B	39.86	25.86%	1.62%	-11.19%	-22.50%
Sector *	66 Neutral	$4.49B	12.28	5.32%	248.53%	4.08%	-12.00%

* Industrials Sector Average

Performance Comparison

ETN

Eaton

326.48

17.16

5.55%

EMR

Emerson Electric Company

122.50

18.40

17.68%

ITW

Illinois Tool Works

246.11

10.77

4.58%

Parker Hannifin

661.97

152.03

29.81%

ROK

Rockwell Automation

320.50

69.83

27.86%

ROP

Roper Technologies

569.48

22.28

4.07%

Eaton Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Eaton Appoints P&G CFO Andre Schulten to Board

Positive

Oct 22, 2024

Eaton Corporation has expanded its board by appointing Andre Schulten, the CFO of Procter & Gamble, highlighting its strategic focus on leveraging global financial expertise. Schulten’s election is poised to enhance Eaton’s initiatives in power management and sustainability, aligning with its growth trends in electrification and digitalization. His extensive international experience in finance and leadership further strengthens Eaton’s commitment to innovation and sustainability in managing power solutions across diverse markets.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.