Eaton (ETN) AI Stock Analysis

• Market Cap: $133.96B
• Dividend Yield: 1.22%
• Average Volume (3M): 2.04M
• Price to Earnings (P/E): 34.6
• Beta (1Y): 1.39
• Revenue Growth: 7.00%
• EPS Growth: 16.84%
• Country: US
• Employees: 94,443
• Sector: Industrials
• Sector Strength: 84
• Industry: Industrial - Machinery
• EPS (TTM): 2.72
• Shares Outstanding: 391,300,000
• 10 Day Avg. Volume: 2,366,431
• 30 Day Avg. Volume: 2,040,871
• PEG Ratio: 7.68
• Price to Book (P/B): 7.02
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 39.06
• Enterprise Value/Market Cap: 1.03
• Enterprise Value/Revenue: 1.40
• Enterprise Value/Gross Profit: 14.24
• Enterprise Value/Ebitda: 6.24
• 1Y Price Target: $358.46
• Price Target Upside: 2.96% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13

• Rating: 80 Outperform
• Price Target: $381.00 ▲(9.44%Upside)

Eaton scores highly due to its strong financial performance and positive earnings call, underscoring robust growth and profitability. Despite a high valuation and technical indicators suggesting caution, the company's strategic positioning in high-growth sectors and solid backlog support its long-term prospects.

Positive Factors

Growth and Margin Expansion

Eaton raised their long-term targets for organic growth and margin, indicating confidence in future performance.

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

Concerns in Vehicle Operations

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

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

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 Business Overview & Revenue Model

Company Description

Eaton Corporation plc operates as a power management company worldwide. The company's Electrical Americas and Electrical Global segment provides electrical components, industrial components, power distribution and assemblies, residential products, single and three phase power quality and connectivity products, wiring devices, circuit protection products, utility power distribution products, power reliability equipment, and services, as well as hazardous duty electrical equipment, emergency lighting, fire detection, explosion-proof instrumentation, and structural support systems. Its Aerospace segment offers pumps, motors, hydraulic power units, hoses and fittings, and electro-hydraulic pumps; valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems, and nose wheel steering systems; hose, thermoplastic tubing products, fittings, adapters, couplings, and sealing and ducting products; air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, valves, and adapters and regulators; oxygen generation system, payload carriages, and thermal management products; and wiring connectors and cables, as well as hydraulic and bag filters, strainers and cartridges, and golf grips for manufacturers of commercial and military aircraft, and related after-market customers, as well as industrial applications. The company's Vehicle segment offers transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, locking and limited slip differentials, transmission controls, and fuel vapor components for the vehicle industry. Its eMobility segment provides voltage inverters, converters, fuses, onboard chargers, circuit protection units, vehicle controls, power distribution systems, fuel tank isolation valves, and commercial vehicle hybrid systems. Eaton Corporation plc was founded in 1911 and is based in Dublin, Ireland.

How the Company Makes Money

Eaton 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 Financial Statement Overview

Summary

Eaton exhibits strong financial performance with impressive revenue growth and healthy profitability metrics. The robust income statement is complemented by efficient cash management, despite a slight decrease in free cash flow growth. The balance sheet is stable, though debt levels should be monitored.

Income Statement

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
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
EBITDA	5.80B	5.63B	4.90B	3.03B	2.42B	1.67B
Net Income	3.94B	3.79B	3.22B	2.46B	2.14B	1.41B
Balance Sheet
Total Assets	39.21B	38.38B	38.43B	35.03B	34.03B	31.82B
Cash, Cash Equivalents and Short-Term Investments	1.94B	2.08B	2.61B	555.00M	568.00M	1.10B
Total Debt	10.75B	9.82B	9.80B	9.11B	8.92B	8.38B
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 Price: 348.14
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 348.14 is above the 20-day moving average (MA) of 330.29, above the 50-day MA of 313.78, and above the 200-day MA of 321.06, indicating a bullish trend. The MACD of 7.29 indicates Negative momentum. The RSI at 66.65 is Neutral, neither overbought nor oversold. The STOCH value of 89.38 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ETN.

Eaton Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ETN	80 Outperform	$133.96B	34.65	20.84%	1.22%	7.00%	16.84%
ITW	77 Outperform	$71.99B	21.64	107.62%	2.44%	-1.85%	12.04%
ROP	77 Outperform	$60.95B	41.19	8.09%	0.58%	13.34%	1.98%
PH	76 Outperform	$86.06B	25.99	27.16%	1.07%	-0.23%	22.41%
EMR	73 Outperform	$72.81B	31.20	9.82%	1.61%	6.49%	24.14%
ROK	68 Neutral	$36.35B	41.04	25.86%	1.61%	-11.19%	-22.50%
Sector *	64 Neutral	$10.34B	15.42	4.40%	1.98%	2.54%	-27.05%

Eaton Corporate Events

Eaton Appoints P&G CFO Andre Schulten to Board

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.