Moderate Price-to-Earnings Ratio
Strong Price-to-Sales Ratio
Strong Return on Equity
Healthy Gross Profit Margin
Strong Interest Coverage
Reasonable Debt Levels
📈 Strong Financial Performance
🛠️ Robust Backlog and Order Growth
🌍 Diverse Market Exposure
🚀 Strong Growth Expectations
🔧 Innovation and Capacity Expansion
High Price-to-Cash-Flow Ratio
Elevated EV/EBITDA Ratio
Moderate Net Profit Margin
Low Quick Ratio
⚠️ Supply Chain Concerns
📉 Potential Market Weaknesses
Eaton demonstrates strong business quality through solid financial performance and a robust backlog. While there are supply chain concerns, growth prospects remain positive with significant investments in capacity and innovation. However, market weaknesses in certain segments may pose risks to achieving overall growth targets.
Analysis Date: January 31, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$370.64
Current Market Price: $245.06
IV/P Ratio: 1.51x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
34.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ETN
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (25.61)
P/B ratio ≤ 1.5 (5.25)
Current ratio ≥ 2.0 (1.50x)
Long-term debt < Net current assets (2.32x)
Margin of safety (34.0%)
ETN does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity of 19.93% demonstrates effective management in generating profits from shareholders' equity, indicating a solid performance.
With a gross profit margin of 53.51%, the company retains a significant portion of revenue after covering direct costs, showcasing operational efficiency.
The net profit margin of 15.25% suggests that while the company is profitable, there may be room for improvement in controlling expenses.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
19.94%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.53%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
38.19%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
15.25%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 36.16 indicates that the company generates ample earnings to cover its interest expenses, reflecting a strong ability to service debt.
A debt-to-equity ratio of 0.53 suggests that the company uses moderate leverage, which indicates a balanced approach to financing.
The quick ratio of 0.96 is below 1, which raises concerns about the company's ability to cover short-term liabilities without selling inventory.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.53x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.50x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Eaton reported a record adjusted EPS of $2.83, an 11% increase year-over-year, and achieved record segment margins of 24.7%. This strong performance reflects the company's ability to execute effectively in challenging circumstances, such as strikes in the Aerospace industry and hurricane impacts.
Eaton's backlog increased significantly, with Electrical Americas seeing a 29% year-over-year increase, and Aerospace up 16%. This strong backlog indicates robust demand and a healthy book-to-bill ratio above one, demonstrating effective market positioning and customer trust.
Eaton benefits from exposure to various end markets, including data centers, aerospace, and utilities, which are expected to grow significantly due to megatrends. This diversification helps mitigate risks and enhances overall business stability.
Despite improvements, there are still concerns regarding labor constraints and supply chain bottlenecks, which could impact future growth and operational efficiency.
Eaton anticipates double-digit growth in key segments such as data centers and commercial aerospace, supported by a robust pipeline and significant backlog. The company expects organic growth of 7-9% for 2025.
Eaton is investing heavily in expanding capacity across its facilities, which will support future growth. The company has earmarked approximately $900 million for capital expenditures, with 80% focused on growth.
Eaton has downgraded its expectations for the residential market and some areas in Europe, indicating that not all segments are expected to perform well in the near term, which could impact overall growth.