EATON CORP PLC (ETN) Stock Fundamental Analysis
NYSE:ETN - New York Stock Exchange, Inc. - IE00B8KQN827 - Common Stock - Currency: USD
Overall ETN gets a fundamental rating of 7 out of 10. We evaluated ETN against 93 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. 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.
Of the past 5 years ETN 4 years had a positive operating cash flow.
1.2 Ratios
ETN has a Return On Assets of 9.60%. This is amongst the best in the industry. ETN outperforms 92.39% of its industry peers.
The Return On Equity of ETN (19.71%) is better than 92.39% of its industry peers.
With an excellent Return On Invested Capital value of 12.31%, ETN belongs to the best of the industry, outperforming 91.30% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ETN is in line with the industry average of 10.23%.
The 3 year average ROIC (10.83%) for ETN is below the current ROIC(12.31%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.6% | ||
| ROE | 19.71% | ||
| ROIC | 12.31% |
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
With an excellent Profit Margin value of 15.31%, ETN belongs to the best of the industry, outperforming 95.65% of the companies in the same industry.
In the last couple of years the Profit Margin of ETN has grown nicely.
Looking at the Operating Margin, with a value of 18.71%, ETN belongs to the top of the industry, outperforming 96.74% of the companies in the same industry.
In the last couple of years the Operating Margin of ETN has grown nicely.
The Gross Margin of ETN (37.83%) is better than 89.13% of its industry peers.
ETN's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.71% | ||
| PM (TTM) | 15.31% | ||
| GM | 37.83% |
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
ETN has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
ETN has less shares outstanding than it did 1 year ago.
ETN has less shares outstanding than it did 5 years ago.
ETN has a better debt/assets ratio than last year.
2.2 Solvency
ETN has an Altman-Z score of 5.15. This indicates that ETN is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of ETN (5.15) is better than 86.96% of its industry peers.
The Debt to FCF ratio of ETN is 2.91, which is a good value as it means it would take ETN, 2.91 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of ETN (2.91) is better than 77.17% of its industry peers.
A Debt/Equity ratio of 0.45 indicates that ETN is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.45, ETN perfoms like the industry average, outperforming 44.57% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 2.91 | ||
| Altman-Z | 5.15 |
ROIC/WACC1.8
WACC6.84%
2.3 Liquidity
ETN has a Current Ratio of 1.53. 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 of 1.53. This is in the lower half of the industry: ETN underperforms 60.87% of its industry peers.
A Quick Ratio of 1.00 indicates that ETN should not have too much problems paying its short term obligations.
ETN has a Quick ratio of 1.00. This is comparable to the rest of the industry: ETN outperforms 41.30% 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 | 1.53 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
ETN shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.55%, which is quite good.
The Earnings Per Share has been growing by 13.71% on average over the past years. This is quite good.
ETN shows a small growth in Revenue. In the last year, the Revenue has grown by 7.25%.
ETN shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.07% yearly.
EPS 1Y (TTM)18.55%
EPS 3Y17.66%
EPS 5Y13.71%
EPS Q2Q%10.98%
Revenue 1Y (TTM)7.25%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%4.58%
3.2 Future
The Earnings Per Share is expected to grow by 12.93% on average over the next years. This is quite good.
ETN is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.22% yearly.
EPS Next Y12.09%
EPS Next 2Y12.01%
EPS Next 3Y10.7%
EPS Next 5Y12.93%
Revenue Next Year7.09%
Revenue Next 2Y7.26%
Revenue Next 3Y7.31%
Revenue Next 5Y10.22%
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.
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 27.53, which means the current valuation is very expensive for ETN.
Based on the Price/Earnings ratio, ETN is valued a bit cheaper than 73.91% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 29.63. ETN is around the same levels.
Based on the Price/Forward Earnings ratio of 24.56, the valuation of ETN can be described as rather expensive.
76.09% of the companies in the same industry are more expensive than ETN, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.68, ETN is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.53 | ||
| Fwd PE | 24.56 |
4.2 Price Multiples
71.74% of the companies in the same industry are more expensive than ETN, based on the Enterprise Value to EBITDA ratio.
ETN's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ETN is cheaper than 71.74% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 36.35 | ||
| EV/EBITDA | 23.17 |
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)2.28
PEG (5Y)2.01
EPS Next 2Y12.01%
EPS Next 3Y10.7%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.22%, ETN has a reasonable but not impressive dividend return.
In the last 3 months the price of ETN has falen by -21.21%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
Compared to an average industry Dividend Yield of 3.59, ETN pays a better dividend. On top of this ETN pays more dividend than 89.13% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.29, ETN's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.22% |
5.2 History
The dividend of ETN has a limited annual growth rate of 5.40%.
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)5.4%
Div Incr Years15
Div Non Decr Years34
5.3 Sustainability
39.12% 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.
DP39.12%
EPS Next 2Y12.01%
EPS Next 3Y10.7%
297.37
-11.45 (-3.71%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryElectrical Equipment
Earnings (Last)
Earnings (Next)
Inst Owners86.21%
Inst Owner Change2.42%
Ins Owners0.07%
Ins Owner Change-4.56%
Market Cap117.52B
Analysts76.97
Price Target392.09 (31.85%)
Short Float %1.2%
Short Ratio1.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.22% |
Yearly Dividend3.46
Dividend Growth(5Y)5.4%
DP39.12%
Div Incr Years15
Div Non Decr Years34
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.92%
Min EPS beat(2)0.37%
Max EPS beat(2)3.47%
EPS beat(4)4
Avg EPS beat(4)2.47%
Min EPS beat(4)0.37%
Max EPS beat(4)3.84%
EPS beat(8)7
Avg EPS beat(8)2.77%
EPS beat(12)9
Avg EPS beat(12)1.95%
EPS beat(16)13
Avg EPS beat(16)3.28%
Revenue beat(2)0
Avg Revenue beat(2)-1.15%
Min Revenue beat(2)-1.44%
Max Revenue beat(2)-0.86%
Revenue beat(4)0
Avg Revenue beat(4)-0.68%
Min Revenue beat(4)-1.44%
Max Revenue beat(4)-0.05%
Revenue beat(8)3
Avg Revenue beat(8)0.12%
Revenue beat(12)4
Avg Revenue beat(12)-0.31%
Revenue beat(16)7
Avg Revenue beat(16)-0.02%
PT rev (1m)-0.57%
PT rev (3m)8.72%
EPS NQ rev (1m)-0.37%
EPS NQ rev (3m)-0.31%
EPS NY rev (1m)-0.24%
EPS NY rev (3m)-0.56%
Revenue NQ rev (1m)-0.62%
Revenue NQ rev (3m)-0.58%
Revenue NY rev (1m)-0.73%
Revenue NY rev (3m)-0.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.53 | ||
| Fwd PE | 24.56 | ||
| P/S | 4.78 | ||
| P/FCF | 36.35 | ||
| P/OCF | 29.17 | ||
| P/B | 6.15 | ||
| P/tB | N/A | ||
| EV/EBITDA | 23.17 |
EPS(TTM)10.8
EY3.63%
EPS(NY)12.11
Fwd EY4.07%
FCF(TTM)8.18
FCFY2.75%
OCF(TTM)10.19
OCFY3.43%
SpS62.26
BVpS48.37
TBVpS-1.86
PEG (NY)2.28
PEG (5Y)2.01
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.6% | ||
| ROE | 19.71% | ||
| ROCE | 14.71% | ||
| ROIC | 12.31% | ||
| ROICexc | 13.15% | ||
| ROICexgc | 40.76% | ||
| OM | 18.71% | ||
| PM (TTM) | 15.31% | ||
| GM | 37.83% | ||
| FCFM | 13.14% |
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-Score8
Asset Turnover0.63
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 2.91 | ||
| Debt/EBITDA | 1.57 | ||
| Cap/Depr | 86.71% | ||
| Cap/Sales | 3.24% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 72.98% | ||
| Profit Quality | 85.8% | ||
| Current Ratio | 1.53 | ||
| Quick Ratio | 1 | ||
| Altman-Z | 5.15 |
F-Score8
WACC6.84%
ROIC/WACC1.8
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)18.55%
EPS 3Y17.66%
EPS 5Y13.71%
EPS Q2Q%10.98%
EPS Next Y12.09%
EPS Next 2Y12.01%
EPS Next 3Y10.7%
EPS Next 5Y12.93%
Revenue 1Y (TTM)7.25%
Revenue growth 3Y8.22%
Revenue growth 5Y3.07%
Sales Q2Q%4.58%
Revenue Next Year7.09%
Revenue Next 2Y7.26%
Revenue Next 3Y7.31%
Revenue Next 5Y10.22%
EBIT growth 1Y22.49%
EBIT growth 3Y24.68%
EBIT growth 5Y10.68%
EBIT Next Year23.29%
EBIT Next 3Y13.94%
EBIT Next 5Y15.31%
FCF growth 1Y15.92%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y14.72%
OCF growth 3YN/A
OCF growth 5YN/A