Eaton Corp plc (ETN) stock analysis

P/E above its 5-year median

Eaton's P/E of 36.7 is above its own 5-year median of 33.1.

P/E above the industry

Eaton's P/E of 36.7 is above the Industrial and Commercial Machinery and Computer Equipment median of 27.5.

EV/EBITDA against its history

Needs positive EBITDA and price history.

P/B above the industry

Eaton's price-to-book of 6.92 is above the Industrial and Commercial Machinery and Computer Equipment median of 2.71.

Trading above fair value

The share price of $360.62 is above our fair value estimate of $230.50.

Margin of safety under 20%

The price is 56.5% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 9.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 19.4% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -2.5% over the last twelve months, against a 5-year average of 23.7% a year.

Growing faster than the industry

Revenue grew 15.5% over the last twelve months; the Industrial and Commercial Machinery and Computer Equipment median is 10.7%.

Guidance raised

Eaton raised its full year 2026 Organic growth outlook on Jul 31, 2026.

Gross margin slipping

Gross margin was 35.9% over the last twelve months, against 38.2% a year earlier.

Return on equity over 15%

Return on equity was 19.7% over the last twelve months and averaged 17.6% over five years.

Return on invested capital

Needs operating income and invested capital.

Return on equity above the industry

Eaton's return on equity of 19.7% is above the Industrial and Commercial Machinery and Computer Equipment median of 7.0%.

Earnings grew over 5 years

Net income grew 23.7% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 12.8% over the last twelve months, against a 5-year average of 13.4%.

Net margin above the industry

Eaton's net margin of 12.8% is above the Industrial and Commercial Machinery and Computer Equipment median of -47.1%.

High debt

Debt is 102% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 54.0% five years ago to 102%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 24.0% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.24 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 3.23; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Eaton paid dividends worth 0.9% of the share price over the last twelve months.

Yield below Treasuries

The 0.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Eaton yields 0.9%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 43.5% of net income.

Covered by free cash flow

Dividends take 42.3% of free cash flow.