EATON CORP PLC (ETN) Stock Fundamental Analysis
NYSE:ETN - New York Stock Exchange, Inc. - IE00B8KQN827 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to ETN. ETN was compared to 97 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 correct valuation and a medium growth rate. Finally 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
ETN had positive earnings in the past year.
ETN had a positive operating cash flow in the past year.
Each year in the past 5 years ETN has been profitable.
Each year in the past 5 years ETN had a positive operating cash flow.
1.2 Ratios
The Return On Assets of ETN (9.89%) is better than 93.81% of its industry peers.
Looking at the Return On Equity, with a value of 20.52%, ETN belongs to the top of the industry, outperforming 91.75% of the companies in the same industry.
ETN has a Return On Invested Capital of 12.88%. This is amongst the best in the industry. ETN outperforms 93.81% 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 9.63%.
The last Return On Invested Capital (12.88%) for ETN is above the 3 year average (10.83%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.89% | ||
| ROE | 20.52% | ||
| ROIC | 12.88% |
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
Looking at the Profit Margin, with a value of 15.25%, ETN belongs to the top of the industry, outperforming 97.94% of the companies in the same industry.
ETN's Profit Margin has improved in the last couple of years.
ETN has a Operating Margin of 18.88%. This is amongst the best in the industry. ETN outperforms 96.91% of its industry peers.
ETN's Operating Margin has improved in the last couple of years.
ETN has a Gross Margin of 38.20%. This is amongst the best in the industry. ETN outperforms 86.60% of its industry peers.
In the last couple of years the Gross Margin of ETN has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.88% | ||
| PM (TTM) | 15.25% | ||
| GM | 38.2% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so ETN is still creating some value.
The number of shares outstanding for ETN has been reduced compared to 1 year ago.
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
An Altman-Z score of 5.09 indicates that ETN is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 5.09, ETN belongs to the best of the industry, outperforming 87.63% of the companies in the same industry.
ETN has a debt to FCF ratio of 2.60. This is a good value and a sign of high solvency as ETN would need 2.60 years to pay back of all of its debts.
ETN has a Debt to FCF ratio of 2.60. This is in the better half of the industry: ETN outperforms 77.32% of its industry peers.
ETN has a Debt/Equity ratio of 0.46. This is a healthy value indicating a solid balance between debt and equity.
ETN has a Debt to Equity ratio of 0.46. This is comparable to the rest of the industry: ETN outperforms 50.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.46 | ||
| Debt/FCF | 2.6 | ||
| Altman-Z | 5.09 |
ROIC/WACC1.75
WACC7.35%
2.3 Liquidity
ETN has a Current Ratio of 1.50. This is a normal value and indicates that ETN is financially healthy and should not expect problems in meeting its short term obligations.
ETN has a Current ratio (1.50) which is in line with its industry peers.
ETN has a Quick Ratio of 1.50. This is a bad value and indicates that ETN is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.96, ETN is not doing good in the industry: 61.86% of the companies in the same industry are doing better.
The current and quick ratio evaluation for ETN is rather negative, while it does have 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 | 1.5 | ||
| Quick Ratio | 0.96 |
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.
ETN shows a small growth in Revenue. In the last year, the Revenue has grown by 7.25%.
Measured over the past years, ETN shows a small growth in Revenue. The Revenue has been growing by 3.07% on average per year.
EPS 1Y (TTM)15.47%
EPS 3Y17.66%
EPS 5Y13.71%
EPS Q2Q%13.33%
Revenue 1Y (TTM)7.25%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%7.3%
3.2 Future
Based on estimates for the next years, ETN will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.10% on average per year.
The Revenue is expected to grow by 8.89% on average over the next years. This is quite good.
EPS Next Y12.05%
EPS Next 2Y12.02%
EPS Next 3Y11.42%
EPS Next 5Y14.1%
Revenue Next Year6.97%
Revenue Next 2Y7.34%
Revenue Next 3Y7.47%
Revenue Next 5Y8.89%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 26.95, which means the current valuation is very expensive for ETN.
72.16% of the companies in the same industry are more expensive than ETN, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 28.22, ETN is valued at the same level.
With a Price/Forward Earnings ratio of 22.12, ETN is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ETN indicates a somewhat cheap valuation: ETN is cheaper than 71.13% 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 20.86.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.95 | ||
| Fwd PE | 22.12 |
4.2 Price Multiples
ETN's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. ETN is cheaper than 72.16% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, ETN is valued a bit cheaper than 70.10% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.38 | ||
| EV/EBITDA | 21.89 |
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)2.24
PEG (5Y)1.97
EPS Next 2Y12.02%
EPS Next 3Y11.42%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.38%, ETN has a reasonable but not impressive dividend return.
ETN's Dividend Yield is rather good when compared to the industry average which is at 4.64. ETN pays more dividend than 88.66% of the companies in the same industry.
With a Dividend Yield of 1.38, ETN pays less dividend than the S&P500 average, which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.38% |
5.2 History
The dividend of ETN has a limited annual growth rate of 5.70%.
ETN has paid a dividend for at least 10 years, which is a reliable track record.
ETN has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.7%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
39.54% of the earnings are spent on dividend by ETN. This is a low number and sustainable payout ratio.
The dividend of ETN is growing, but earnings are growing more, so the dividend growth is sustainable.
DP39.54%
EPS Next 2Y12.02%
EPS Next 3Y11.42%
299.71
-1.95 (-0.65%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryElectrical Equipment
Earnings (Last)
Earnings (Next)
Inst Owners84.62%
Inst Owner Change0.13%
Ins Owners0.05%
Ins Owner Change-2.74%
Market Cap117.42B
Analysts76.88
Price Target348.25 (16.2%)
Short Float %1.91%
Short Ratio1.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.38% |
Yearly Dividend3.79
Dividend Growth(5Y)5.7%
DP39.54%
Div Incr Years15
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.05%
Min EPS beat(2)-0.28%
Max EPS beat(2)0.37%
EPS beat(4)3
Avg EPS beat(4)1.85%
Min EPS beat(4)-0.28%
Max EPS beat(4)3.84%
EPS beat(8)7
Avg EPS beat(8)2.79%
EPS beat(12)9
Avg EPS beat(12)1.98%
EPS beat(16)12
Avg EPS beat(16)2.94%
Revenue beat(2)0
Avg Revenue beat(2)-1.95%
Min Revenue beat(2)-2.45%
Max Revenue beat(2)-1.44%
Revenue beat(4)0
Avg Revenue beat(4)-1.28%
Min Revenue beat(4)-2.45%
Max Revenue beat(4)-0.35%
Revenue beat(8)2
Avg Revenue beat(8)-0.2%
Revenue beat(12)4
Avg Revenue beat(12)-0.26%
Revenue beat(16)6
Avg Revenue beat(16)-0.2%
PT rev (1m)-4.89%
PT rev (3m)-11.18%
EPS NQ rev (1m)0.32%
EPS NQ rev (3m)0.09%
EPS NY rev (1m)0.24%
EPS NY rev (3m)0.22%
Revenue NQ rev (1m)-0.14%
Revenue NQ rev (3m)-1.34%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)-0.4%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.95 | ||
| Fwd PE | 22.12 | ||
| P/S | 4.72 | ||
| P/FCF | 33.38 | ||
| P/OCF | 27.14 | ||
| P/B | 6.35 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.89 |
EPS(TTM)11.12
EY3.71%
EPS(NY)13.55
Fwd EY4.52%
FCF(TTM)8.98
FCFY3%
OCF(TTM)11.04
OCFY3.68%
SpS63.5
BVpS47.19
TBVpS-2.25
PEG (NY)2.24
PEG (5Y)1.97
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.89% | ||
| ROE | 20.52% | ||
| ROCE | 15.39% | ||
| ROIC | 12.88% | ||
| ROICexc | 13.82% | ||
| ROICexgc | 43.33% | ||
| OM | 18.88% | ||
| PM (TTM) | 15.25% | ||
| GM | 38.2% | ||
| FCFM | 14.14% |
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-Score7
Asset Turnover0.65
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.46 | ||
| Debt/FCF | 2.6 | ||
| Debt/EBITDA | 1.51 | ||
| Cap/Depr | 87.73% | ||
| Cap/Sales | 3.25% | ||
| Interest Coverage | 14.28 | ||
| Cash Conversion | 77% | ||
| Profit Quality | 92.73% | ||
| Current Ratio | 1.5 | ||
| Quick Ratio | 0.96 | ||
| Altman-Z | 5.09 |
F-Score7
WACC7.35%
ROIC/WACC1.75
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 Y12.05%
EPS Next 2Y12.02%
EPS Next 3Y11.42%
EPS Next 5Y14.1%
Revenue 1Y (TTM)7.25%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%7.3%
Revenue Next Year6.97%
Revenue Next 2Y7.34%
Revenue Next 3Y7.47%
Revenue Next 5Y8.89%
EBIT growth 1Y18.07%
EBIT growth 3Y24.68%
EBIT growth 5Y10.68%
EBIT Next Year22.95%
EBIT Next 3Y13.88%
EBIT Next 5Y12.46%
FCF growth 1Y22.71%
FCF growth 3Y30.36%
FCF growth 5Y4.2%
OCF growth 1Y19.37%
OCF growth 3Y25.99%
OCF growth 5Y4.62%