EATON CORP PLC (ETN) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ETN - IE00B8KQN827 - Common Stock
341.19 USD
+8.91 (+2.68%)
341.01 USD
-0.18 (-0.05%)
ETN gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 91 industry peers in the Electrical Equipment industry. ETN has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. ETN has a correct valuation and a medium growth rate. These ratings could make ETN a good candidate for 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.
- In the past 5 years ETN has always been profitable.
- ETN had a positive operating cash flow in each of the past 5 years.
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.
- Looking at the Return On Equity, with a value of 20.84%, ETN belongs to the top of the industry, outperforming 92.31% of the companies in the same industry.
- With an excellent Return On Invested Capital value of 13.15%, ETN belongs to the best of the industry, outperforming 92.31% of the companies in the same industry.
- 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
- Looking at the Profit Margin, with a value of 14.74%, ETN belongs to the top of the industry, outperforming 89.01% of the companies in the same industry.
- ETN's Profit Margin has improved in the last couple of years.
- The Operating Margin of ETN (18.84%) is better than 93.41% of its industry peers.
- 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.
- In the last couple of years the Gross Margin of ETN has grown nicely.
| 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
- 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
- ETN has a better debt/assets ratio than last year.
2.2 Solvency
- ETN has an Altman-Z score of 5.04. This indicates that ETN is financially healthy and has little risk of bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 5.04, ETN is in the better half of the industry, outperforming 75.82% of the companies in the same industry.
- 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.
- ETN has a better Debt to FCF ratio (3.21) than 81.32% of its industry peers.
- ETN has a Debt/Equity ratio of 0.51. This is a neutral value indicating ETN is somewhat dependend on debt financing.
- The Debt to Equity ratio of ETN (0.51) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.51 | ||
| Debt/FCF | 3.21 | ||
| Altman-Z | 5.04 |
ROIC/WACC1.55
WACC8.48%
2.3 Liquidity
- A Current Ratio of 1.28 indicates that ETN should not have too much problems paying its short term obligations.
- Looking at the Current ratio, with a value of 1.28, ETN is doing worse than 63.74% of the companies in the same industry.
- A Quick Ratio of 0.79 indicates that ETN may have some problems paying its short term obligations.
- Looking at the Quick ratio, with a value of 0.79, ETN is doing worse than 63.74% of the companies in the same industry.
- 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 | 1.28 | ||
| 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.
- ETN shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 13.71% yearly.
- Looking at the last year, ETN shows a quite strong growth in Revenue. The Revenue has grown by 8.24% in the last year.
- The Revenue has been growing slightly by 3.07% on average over the past years.
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.
- The Revenue is expected to grow by 9.27% on average over the next years. This is quite good.
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.
- 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
- With a Price/Earnings ratio of 29.49, ETN can be considered very expensive at the moment.
- Based on the Price/Earnings ratio, ETN is valued a bit cheaper than the industry average as 78.02% of the companies are valued more expensively.
- ETN is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.87, which is the current average of the S&P500 Index.
- A Price/Forward Earnings ratio of 24.93 indicates a rather expensive valuation of ETN.
- Based on the Price/Forward Earnings ratio, ETN is valued a bit cheaper than 76.92% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of ETN to the average of the S&P500 Index (25.96), we can say ETN is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.49 | ||
| Fwd PE | 24.93 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, ETN is valued a bit cheaper than the industry average as 75.82% of the companies are valued more expensively.
- ETN's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ETN is cheaper than 72.53% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.92 | ||
| EV/EBITDA | 23.01 |
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)2.39
PEG (5Y)2.15
EPS Next 2Y12.58%
EPS Next 3Y13.18%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.25%, ETN has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 0.26, ETN pays a better dividend. On top of this ETN pays more dividend than 92.31% of the companies listed 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 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 40.54% of its income as dividend. 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 29.49 and the Price/Book (PB) ratio is 7.03.
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.