EATON CORP PLC (ETN) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ETN - IE00B8KQN827 - Common Stock
332.28 USD
+1.06 (+0.32%)
333 USD
+0.72 (+0.22%)
Overall ETN gets a fundamental rating of 7 out of 10. We evaluated ETN against 91 industry peers in the Electrical Equipment industry. Both the health and profitability get an excellent rating, making ETN a very profitable company, without any liquidiy or solvency issues. ETN has a decent growth rate and is not valued too expensively. These ratings could make ETN a good candidate for 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
- ETN's Return On Assets of 9.66% is amongst the best of the industry. ETN outperforms 91.21% of its industry peers.
- ETN has a Return On Equity of 20.84%. This is amongst the best in the industry. ETN outperforms 92.31% of its industry peers.
- ETN has a better Return On Invested Capital (13.15%) than 92.31% 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 9.92%.
- The 3 year average ROIC (10.83%) for ETN is below the current ROIC(13.15%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.66% | ||
| ROE | 20.84% | ||
| ROIC | 13.15% |
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 has a better Profit Margin (14.74%) than 89.01% of its industry peers.
- In the last couple of years the Profit Margin of ETN has grown nicely.
- Looking at the Operating Margin, with a value of 18.84%, ETN belongs to the top of the industry, outperforming 93.41% of the companies in the same industry.
- In the last couple of years the Operating Margin of ETN has grown nicely.
- ETN's Gross Margin of 38.10% is amongst the best of the industry. ETN outperforms 86.81% of its industry peers.
- ETN's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.84% | ||
| PM (TTM) | 14.74% | ||
| GM | 38.1% |
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.
- Compared to 1 year ago, ETN has less shares outstanding
- The number of shares outstanding for ETN has been reduced compared to 5 years ago.
- The debt/assets ratio for ETN has been reduced compared to a year ago.
2.2 Solvency
- ETN has an Altman-Z score of 5.03. This indicates that ETN is financially healthy and has little risk of bankruptcy at the moment.
- ETN's Altman-Z score of 5.03 is fine compared to the rest of the industry. ETN outperforms 75.82% of its industry peers.
- ETN has a debt to FCF ratio of 3.21. This is a good value and a sign of high solvency as ETN would need 3.21 years to pay back of all of its debts.
- The Debt to FCF ratio of ETN (3.21) is better than 81.32% of its industry peers.
- A Debt/Equity ratio of 0.51 indicates that ETN is somewhat dependend on debt financing.
- With a Debt to Equity ratio value of 0.51, ETN perfoms like the industry average, outperforming 50.55% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.51 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 5.03 |
ROIC/WACC1.55
WACC8.48%
2.3 Liquidity
- ETN has a Current Ratio of 1.28. This is a normal value and indicates that ETN is financially healthy and should not expect problems in meeting its short term obligations.
- With a Current ratio value of 1.28, ETN is not doing good in the industry: 63.74% of the companies in the same industry are doing better.
- ETN has a Quick Ratio of 1.28. This is a bad value and indicates that ETN is not financially healthy enough and could expect problems in meeting its short term obligations.
- ETN has a worse Quick ratio (0.79) than 63.74% of its industry peers.
- 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 | 1.28 | ||
| Quick Ratio | 0.79 |
3. Growth
3.1 Past
- ETN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.98%, which is quite good.
- Measured over the past years, ETN shows a quite strong growth in Earnings Per Share. The EPS has been growing by 13.71% on average per year.
- The Revenue has grown by 8.24% in the past year. This is quite good.
- ETN shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.07% yearly.
EPS 1Y (TTM)9.98%
EPS 3Y17.66%
EPS 5Y13.71%
EPS Q2Q%8.1%
Revenue 1Y (TTM)8.24%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%10.13%
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 10.78% on average per year.
- ETN is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.27% yearly.
EPS Next Y12.32%
EPS Next 2Y12.58%
EPS Next 3Y13.18%
EPS Next 5Y10.78%
Revenue Next Year9.85%
Revenue Next 2Y9.63%
Revenue Next 3Y9.38%
Revenue Next 5Y9.27%
3.3 Evolution
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
- 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 28.72, which means the current valuation is very expensive for ETN.
- Compared to the rest of the industry, the Price/Earnings ratio of ETN indicates a somewhat cheap valuation: ETN is cheaper than 78.02% of the companies listed in the same industry.
- ETN is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.25, which is the current average of the S&P500 Index.
- With a Price/Forward Earnings ratio of 24.28, ETN is valued on the expensive side.
- ETN's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ETN is cheaper than 76.92% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, ETN is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.72 | ||
| Fwd PE | 24.28 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, ETN is valued a bit cheaper than 75.82% of the companies in the same industry.
- 72.53% of the companies in the same industry are more expensive than ETN, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.87 | ||
| EV/EBITDA | 22.94 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ETN does not grow enough to justify the current Price/Earnings ratio.
- ETN has an outstanding profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as ETN's earnings are expected to grow with 13.18% in the coming years.
PEG (NY)2.33
PEG (5Y)2.09
EPS Next 2Y12.58%
EPS Next 3Y13.18%
5. Dividend
5.1 Amount
- ETN has a Yearly Dividend Yield of 1.25%. Purely for dividend investing, there may be better candidates out there.
- ETN's Dividend Yield is rather good when compared to the industry average which is at 0.26. ETN pays more dividend than 92.31% of the companies in the same industry.
- Compared to the average S&P500 Dividend Yield of 1.82, ETN is paying slightly less dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.25% |
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 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
- 40.54% of the earnings are spent on dividend by ETN. This is a bit on the high side, but may be sustainable.
- ETN's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP40.54%
EPS Next 2Y12.58%
EPS Next 3Y13.18%
EATON CORP PLC / ETN FAQ
Can you provide the ChartMill fundamental rating for EATON CORP PLC?
ChartMill assigns a fundamental rating of 7 / 10 to ETN.
What is the valuation status of EATON CORP PLC (ETN) stock?
ChartMill assigns a valuation rating of 4 / 10 to EATON CORP PLC (ETN). This can be considered as Fairly Valued.
How profitable is EATON CORP PLC (ETN) stock?
EATON CORP PLC (ETN) has a profitability rating of 9 / 10.
Can you provide the PE and PB ratios for ETN stock?
The Price/Earnings (PE) ratio for EATON CORP PLC (ETN) is 28.72 and the Price/Book (PB) ratio is 6.85.
What is the earnings growth outlook for EATON CORP PLC?
The Earnings per Share (EPS) of EATON CORP PLC (ETN) is expected to grow by 12.32% in the next year.