Balancing Dividends and Fundamentals: The Case of NYSE:ETN.

Last update: Aug 5, 2024

EATON CORP PLC (NYSE:ETN) was identified as a stock worth exploring by dividend investors by our stock screener. NYSE:ETN scores well on profitability, solvency and liquidity. At the same time it seems to pay a decent dividend. We'll explore this a bit deeper below.

Looking at the Dividend

ChartMill employs its own Dividend Rating system for all stocks. This score, on a scale of 0 to 10, is determined by evaluating different dividend factors, such as yield, historical performance, dividend growth, and sustainability. NYSE:ETN has been assigned a 7 for dividend:

Compared to an average industry Dividend Yield of 2.30, ETN pays a better dividend. On top of this ETN pays more dividend than 92.39% of the companies listed in the same industry.
ETN has paid a dividend for at least 10 years, which is 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.
39.53% of the earnings are spent on dividend by ETN. This is a low number and sustainable payout ratio.
ETN's earnings are growing more than its dividend. This makes the dividend growth sustainable.

Deciphering NYSE:ETN's Health Rating

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:ETN has achieved a 7 out of 10:

ETN has an Altman-Z score of 4.84. This indicates that ETN is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 4.84, ETN belongs to the best of the industry, outperforming 83.70% of the companies in the same industry.
The Debt to FCF ratio of ETN is 3.26, which is a good value as it means it would take ETN, 3.26 years of fcf income to pay off all of its debts.
ETN's Debt to FCF ratio of 3.26 is fine compared to the rest of the industry. ETN outperforms 76.09% of its industry peers.
ETN has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
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.

Analyzing Profitability Metrics

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:ETN, the assigned 9 is a significant indicator of profitability:

ETN has a better Return On Assets (9.27%) than 88.04% of its industry peers.
With an excellent Return On Equity value of 18.99%, ETN belongs to the best of the industry, outperforming 91.30% of the companies in the same industry.
ETN has a better Return On Invested Capital (12.11%) than 89.13% of its industry peers.
The 3 year average ROIC (9.14%) for ETN is below the current ROIC(12.11%), indicating increased profibility in the last year.
ETN has a Profit Margin of 15.12%. This is amongst the best in the industry. ETN outperforms 94.57% of its industry peers.
ETN's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 18.57%, ETN belongs to the top of the industry, outperforming 93.48% of the companies in the same industry.
In the last couple of years the Operating Margin of ETN has grown nicely.
ETN has a better Gross Margin (37.53%) than 89.13% of its industry peers.
ETN's Gross Margin has improved in the last couple of years.

More Best Dividend stocks can be found in our Best Dividend screener.

Check the latest full fundamental report of ETN for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.