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Eaton (ETN)
NYSE:ETN

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
Industry Leadership
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.
US 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
BEV adoption rates tapering may lead investors to question the relevancy of ETN's vehicle operations to the longer-term core growth focus areas.
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.
Pricing 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.

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

Eaton Business Overview & Revenue Model

Company DescriptionEaton 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 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
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: 6.52%|
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
91
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
78
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
85
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
25.31B24.88B23.20B20.75B19.63B17.86B
Gross Profit
9.73B9.50B8.43B6.89B6.33B5.45B
EBIT
4.90B4.63B3.88B2.08B1.50B863.00M
EBITDA
5.80B5.63B4.90B3.03B2.42B1.67B
Net Income Common Stockholders
3.94B3.79B3.22B2.46B2.14B1.41B
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.94B2.08B2.61B555.00M568.00M1.10B
Total Assets
39.21B38.38B38.43B35.03B34.03B31.82B
Total Debt
10.75B9.82B9.80B9.11B8.92B8.38B
Net Debt
8.97B9.27B9.31B8.82B8.62B7.95B
Total Liabilities
20.66B19.85B19.36B17.95B17.58B16.85B
Stockholders Equity
18.51B18.49B19.04B17.04B16.41B14.93B
Cash FlowFree Cash Flow
3.32B3.52B2.87B1.94B1.59B2.56B
Operating Cash Flow
4.09B4.33B3.62B2.53B2.16B2.94B
Investing Cash Flow
929.00M-271.00M-2.58B-1.20B-1.76B397.00M
Financing Cash Flow
-3.64B-3.94B-871.00M-1.34B-535.00M-3.26B

Eaton Technical Analysis

Technical Analysis Sentiment
Positive
Last Price320.20
Price Trends
50DMA
293.98
Positive
100DMA
302.97
Positive
200DMA
317.63
Positive
Market Momentum
MACD
8.99
Positive
RSI
57.80
Neutral
STOCH
59.52
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 320.2 is above the 20-day moving average (MA) of 318.66, above the 50-day MA of 293.98, and above the 200-day MA of 317.63, indicating a bullish trend. The MACD of 8.99 indicates Positive momentum. The RSI at 57.80 is Neutral, neither overbought nor oversold. The STOCH value of 59.52 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
1.
Technology disruption may impact our stock price and/or negatively impact our end markets. Q4, 2024
2.
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 (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
ETETN
81
Outperform
$125.29B32.3220.84%1.21%7.00%16.84%
ROROP
80
Outperform
$61.31B41.138.09%0.55%13.34%1.98%
ITITW
79
Outperform
$71.81B21.57107.62%2.41%-1.85%12.04%
PHPH
76
Outperform
$84.93B25.5827.16%0.98%-0.23%22.41%
EMEMR
73
Outperform
$67.15B28.499.82%1.76%6.49%24.14%
ROROK
68
Neutral
$35.57B39.7325.86%1.62%-11.19%-22.50%
65
Neutral
$4.46B12.185.23%248.97%4.11%-12.29%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ETN
Eaton
320.20
0.03
<0.01%
EMR
Emerson Electric Company
118.86
11.75
10.97%
ITW
Illinois Tool Works
242.65
8.38
3.58%
PH
Parker Hannifin
664.70
156.88
30.89%
ROK
Rockwell Automation
317.28
63.96
25.25%
ROP
Roper Technologies
566.69
33.61
6.30%

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.