Morningstar

Eaton Corp PLC ETN

Morningstar Rating
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Stock XNYS Rating as of
$328.45 −4.57 (1.37%)
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As of Delayed Price Post-Trading: $328.65 +0.19

Company Report

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Eaton: Upgrading to Wide Economic Moat Rating; Outsize Demand Likely Already Recognized by Market

After taking a fresh look at Eaton, we’ve increased the firm’s fair value estimate to $281 per share from $229, stemming primarily from an economic moat rating upgrade from narrow to wide that extends the duration we believe Eaton can outearn its cost of capital. Eaton is a massive beneficiary of both short- and long-term trends that have created maintainable outsize demand for the company’s products. Some of these trends include the explosion of data center buildouts and energy grid investments positively inflecting demand for Eaton’s electrical products and the ongoing narrowbody plane shortage driving supernormal commercial aviation aftermarket growth.

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Price vs Fair Value

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ETN is trading at a 550% premium.
Price
$333.02
Fair Value
$438.00
Uncertainty
Medium
1-Star Price
$694.42
5-Star Price
$136.80
Economic Moat
Cyxn
Capital Allocation
Nkzpdpdr

Bulls Say, Bears Say

Bulls

Eaton’s recent portfolio changes should create value for shareholders and transform its returns on invested capital from around 10% to the mid to upper teens.

Bears

Eaton has a worse return profile than peers and deserves to trade at a discount. It lacks a true serviceable base of equipment, which hampers its ability to generate superior returns.

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News

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Trading Information

Previous Close Price
$333.02
Day Range
$326.65–333.91
52-Week Range
$191.82–345.19
Bid/Ask
$325.18 / $331.86
Market Cap
$130.76 Bil
Volume/Avg
2.1 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
32.81
Price/Sales
5.54
Dividend Yield (Trailing)
1.11%
Dividend Yield (Forward)
1.13%
Total Yield
1.66%

Company Profile

Founded in 1911 by Joseph Eaton, the eponymous company began by selling truck axles in New Jersey. Eaton has since become an industrial powerhouse largely through acquisitions in various end markets. Eaton’s portfolio can broadly be divided into two parts: its electrical and industrial businesses. Its electrical portfolio (representing around 70% of company revenue) sells components within data centers, utilities, and commercial and residential buildings, while its industrial business (30% of revenue) sells components within commercial and passenger vehicles and aircraft. Eaton receives favorable tax treatment as a domiciliary of Ireland, but it generates over half of its revenue within the US.
Sector
Industrials
Industry
Specialty Industrial Machinery
Stock Style Box
Large Core
Total Number of Employees
94,000
Website
https://www.eaton.com

Competitors

Valuation

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Metric
ETN
PH
EMR
Price/Earnings (Normalized)
 32.8124.9820.55
Price/Book Value
 6.906.772.99
Price/Sales
 5.544.153.69
Price/Cash Flow
 32.0621.0619.26
Price/Earnings
ETN
PH
EMR

Financial Strength

Metric
ETN
PH
EMR
Quick Ratio
 0.940.490.67
Current Ratio
 1.560.931.16
Interest Coverage
 37.668.076.99
Quick Ratio
ETN
PH
EMR

Profitability

Metric
ETN
PH
EMR
Return on Assets (Normalized)
 10.71%11.18%5.36%
Return on Equity (Normalized)
 21.73%29.66%11.67%
Return on Invested Capital (Normalized)
 14.56%16.18%6.49%
Return on Assets
ETN
PH
EMR

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