EATON CORP PLC (ETN) Stock Fundamental Analysis
NYSE:ETN - New York Stock Exchange, Inc. - IE00B8KQN827 - Common Stock - Currency: USD
Taking everything into account, ETN scores 7 out of 10 in our fundamental rating. ETN was compared to 94 industry peers in the Electrical Equipment industry. ETN gets an excellent profitability rating and is at the same time showing great financial health properties. ETN has a decent growth rate and is not valued too expensively. ETN also has an excellent dividend rating. These ratings could make ETN a good candidate for dividend and quality investing.
1. Profitability
1.1 Basic Checks
In the past year ETN was profitable.
In the past year ETN had a positive cash flow from operations.
Each year in the past 5 years ETN has been profitable.
In the past 5 years ETN always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 10.04%, ETN belongs to the top of the industry, outperforming 94.68% of the companies in the same industry.
The Return On Equity of ETN (21.27%) is better than 91.49% of its industry peers.
The Return On Invested Capital of ETN (13.39%) is better than 92.55% of its industry peers.
ETN had an Average Return On Invested Capital over the past 3 years of 10.83%. This is in line with the industry average of 9.87%.
The last Return On Invested Capital (13.39%) for ETN is above the 3 year average (10.83%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.04% | ||
| ROE | 21.27% | ||
| ROIC | 13.39% |
ROA(3y)8.43%
ROA(5y)7.2%
ROE(3y)17.29%
ROE(5y)14.88%
ROIC(3y)10.83%
ROIC(5y)9.09%
1.3 Margins
ETN's Profit Margin of 15.55% is amongst the best of the industry. ETN outperforms 93.62% of its industry peers.
In the last couple of years the Profit Margin of ETN has grown nicely.
The Operating Margin of ETN (19.27%) is better than 96.81% of its industry peers.
In the last couple of years the Operating Margin of ETN has grown nicely.
The Gross Margin of ETN (38.45%) is better than 88.30% of its industry peers.
ETN's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.27% | ||
| PM (TTM) | 15.55% | ||
| GM | 38.45% |
OM growth 3Y15.21%
OM growth 5Y7.39%
PM growth 3Y11.77%
PM growth 5Y8.09%
GM growth 3Y5.78%
GM growth 5Y2.99%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), ETN is creating some value.
Compared to 1 year ago, ETN has less shares outstanding
Compared to 5 years ago, ETN has less shares outstanding
The debt/assets ratio for ETN has been reduced compared to a year ago.
2.2 Solvency
ETN has an Altman-Z score of 5.17. This indicates that ETN is financially healthy and has little risk of bankruptcy at the moment.
ETN has a better Altman-Z score (5.17) than 85.11% of its industry peers.
ETN has a debt to FCF ratio of 3.04. This is a good value and a sign of high solvency as ETN would need 3.04 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 3.04, ETN is in the better half of the industry, outperforming 78.72% of the companies in the same industry.
A Debt/Equity ratio of 0.45 indicates that ETN is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.45, ETN is in line with its industry, outperforming 46.81% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 3.04 | ||
| Altman-Z | 5.17 |
ROIC/WACC1.79
WACC7.46%
2.3 Liquidity
ETN has a Current Ratio of 1.31. This is a normal value and indicates that ETN is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.31, ETN is doing worse than 63.83% of the companies in the same industry.
A Quick Ratio of 0.84 indicates that ETN may have some problems paying its short term obligations.
ETN has a worse Quick ratio (0.84) than 61.70% of its industry peers.
ETN does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.31 | ||
| Quick Ratio | 0.84 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 15.47% over the past year.
ETN shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 13.71% yearly.
The Revenue has been growing slightly by 7.00% in the past year.
ETN shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.07% yearly.
EPS 1Y (TTM)15.47%
EPS 3Y17.66%
EPS 5Y13.71%
EPS Q2Q%13.33%
Revenue 1Y (TTM)7%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%7.3%
3.2 Future
The Earnings Per Share is expected to grow by 14.10% on average over the next years. This is quite good.
Based on estimates for the next years, ETN will show a quite strong growth in Revenue. The Revenue will grow by 8.85% on average per year.
EPS Next Y11.87%
EPS Next 2Y12.36%
EPS Next 3Y11.82%
EPS Next 5Y14.1%
Revenue Next Year8.95%
Revenue Next 2Y8.3%
Revenue Next 3Y8.09%
Revenue Next 5Y8.85%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 29.11, which means the current valuation is very expensive for ETN.
Based on the Price/Earnings ratio, ETN is valued a bit cheaper than 73.40% of the companies in the same industry.
ETN is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.31, which is the current average of the S&P500 Index.
ETN is valuated rather expensively with a Price/Forward Earnings ratio of 23.74.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ETN indicates a somewhat cheap valuation: ETN is cheaper than 73.40% of the companies listed in the same industry.
ETN's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.13.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.11 | ||
| Fwd PE | 23.74 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ETN indicates a somewhat cheap valuation: ETN is cheaper than 73.40% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ETN is valued a bit cheaper than the industry average as 72.34% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.17 | ||
| EV/EBITDA | 23.05 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of ETN may justify a higher PE ratio.
PEG (NY)2.45
PEG (5Y)2.12
EPS Next 2Y12.36%
EPS Next 3Y11.82%
5. Dividend
5.1 Amount
ETN has a Yearly Dividend Yield of 1.26%.
ETN's Dividend Yield is rather good when compared to the industry average which is at 4.30. ETN pays more dividend than 89.36% of the companies in the same industry.
With a Dividend Yield of 1.26, ETN pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.26% |
5.2 History
The dividend of ETN has a limited annual growth rate of 5.70%.
ETN has been paying a dividend for at least 10 years, so it has a reliable track record.
ETN has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)5.7%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
ETN pays out 38.84% of its income as dividend. This is a sustainable payout ratio.
The dividend of ETN is growing, but earnings are growing more, so the dividend growth is sustainable.
DP38.84%
EPS Next 2Y12.36%
EPS Next 3Y11.82%
323.66
-6.68 (-2.02%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryElectrical Equipment
Earnings (Last)
Earnings (Next)
Inst Owners85.8%
Inst Owner Change2.13%
Ins Owners0.06%
Ins Owner Change-1.62%
Market Cap126.65B
Analysts77.58
Price Target354.37 (9.49%)
Short Float %2.07%
Short Ratio2.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.26% |
Yearly Dividend3.79
Dividend Growth(5Y)5.7%
DP38.84%
Div Incr Years15
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.38%
Min EPS beat(2)-0.48%
Max EPS beat(2)-0.28%
EPS beat(4)2
Avg EPS beat(4)0.77%
Min EPS beat(4)-0.48%
Max EPS beat(4)3.47%
EPS beat(8)6
Avg EPS beat(8)2.18%
EPS beat(12)8
Avg EPS beat(12)1.91%
EPS beat(16)11
Avg EPS beat(16)1.94%
Revenue beat(2)1
Avg Revenue beat(2)-0.77%
Min Revenue beat(2)-2.45%
Max Revenue beat(2)0.92%
Revenue beat(4)1
Avg Revenue beat(4)-0.96%
Min Revenue beat(4)-2.45%
Max Revenue beat(4)0.92%
Revenue beat(8)2
Avg Revenue beat(8)-0.55%
Revenue beat(12)4
Avg Revenue beat(12)-0.2%
Revenue beat(16)6
Avg Revenue beat(16)-0.28%
PT rev (1m)0.75%
PT rev (3m)-7.9%
EPS NQ rev (1m)-0.12%
EPS NQ rev (3m)-4%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.2%
Revenue NQ rev (1m)-0.01%
Revenue NQ rev (3m)1.69%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)1.86%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.11 | ||
| Fwd PE | 23.74 | ||
| P/S | 5 | ||
| P/FCF | 38.17 | ||
| P/OCF | 30.97 | ||
| P/B | 6.84 | ||
| P/tB | N/A | ||
| EV/EBITDA | 23.05 |
EPS(TTM)11.12
EY3.44%
EPS(NY)13.64
Fwd EY4.21%
FCF(TTM)8.48
FCFY2.62%
OCF(TTM)10.45
OCFY3.23%
SpS64.69
BVpS47.29
TBVpS-2.38
PEG (NY)2.45
PEG (5Y)2.12
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.04% | ||
| ROE | 21.27% | ||
| ROCE | 16.43% | ||
| ROIC | 13.39% | ||
| ROICexc | 14.3% | ||
| ROICexgc | 44.79% | ||
| OM | 19.27% | ||
| PM (TTM) | 15.55% | ||
| GM | 38.45% | ||
| FCFM | 13.11% |
ROA(3y)8.43%
ROA(5y)7.2%
ROE(3y)17.29%
ROE(5y)14.88%
ROIC(3y)10.83%
ROIC(5y)9.09%
ROICexc(3y)11.53%
ROICexc(5y)9.59%
ROICexgc(3y)38.67%
ROICexgc(5y)33.99%
ROCE(3y)12.98%
ROCE(5y)10.88%
ROICexcg growth 3Y6.49%
ROICexcg growth 5Y11.09%
ROICexc growth 3Y21.4%
ROICexc growth 5Y9.81%
OM growth 3Y15.21%
OM growth 5Y7.39%
PM growth 3Y11.77%
PM growth 5Y8.09%
GM growth 3Y5.78%
GM growth 5Y2.99%
F-Score8
Asset Turnover0.65
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 3.04 | ||
| Debt/EBITDA | 1.45 | ||
| Cap/Depr | 83.19% | ||
| Cap/Sales | 3.05% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 70.46% | ||
| Profit Quality | 84.28% | ||
| Current Ratio | 1.31 | ||
| Quick Ratio | 0.84 | ||
| Altman-Z | 5.17 |
F-Score8
WACC7.46%
ROIC/WACC1.79
Cap/Depr(3y)77.39%
Cap/Depr(5y)68.5%
Cap/Sales(3y)3.13%
Cap/Sales(5y)2.9%
Profit Quality(3y)86.8%
Profit Quality(5y)103.14%
High Growth Momentum
Growth
EPS 1Y (TTM)15.47%
EPS 3Y17.66%
EPS 5Y13.71%
EPS Q2Q%13.33%
EPS Next Y11.87%
EPS Next 2Y12.36%
EPS Next 3Y11.82%
EPS Next 5Y14.1%
Revenue 1Y (TTM)7%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%7.3%
Revenue Next Year8.95%
Revenue Next 2Y8.3%
Revenue Next 3Y8.09%
Revenue Next 5Y8.85%
EBIT growth 1Y16.23%
EBIT growth 3Y24.68%
EBIT growth 5Y10.68%
EBIT Next Year24.05%
EBIT Next 3Y14.37%
EBIT Next 5Y12.5%
FCF growth 1Y49.66%
FCF growth 3Y30.36%
FCF growth 5Y4.2%
OCF growth 1Y44.73%
OCF growth 3Y25.99%
OCF growth 5Y4.62%