ETN  Eaton Corporation

Exchange

NYSE

Sector

Technology

Industry

Industrial Machinery/Components

Market Cap.

32.61B

Vuru Grade

56.16/100

Current Price

$72.39
+0.27 (+0.37%)

Growth Price

$74.79
Fairly valued

Stability Price

$10.50
Overvalued by 85.49%

Company Metrics

  • P/E 17.19
  • P/S 1.65
  • P/B 2.18
  • EPS 4.21
  • Cash ROIC 5.94%
  • Cash Ratio 0.14
  • Dividend 2.28 / 3.14%
  • Avg. Vol. 2.21M
  • Shares 450.48M
  • Market Cap. 32.61B

Company Description

Eaton Corporation operates as a power management company worldwide. It provides electrical components and systems for power quality, distribution, and control; hydraulics components, systems, and services for industrial and mobile equipment; aerospace fuel, hydraulics, and pneumatic systems for commercial and military use; and truck and automotive drivetrain, and powertrain systems for performance... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Eaton Corporation PLC Ordinary Shares (ETN) Releases Earnings Results, Beats ...
Highland Mirror - Feb 2, 2017
Eaton Corporation PLC Ordinary Shares (ETN) announced its most recent quarterly financial results on Thursday, Feb-2-2017. ETN said it had a profit of $1.12 Earnings per Share for the quarter.
A statement released earlier today by Avondale Partners about Eaton ... - Breaking Finance News
Eaton Corporation, PLC (NYSE:ETN) Price-to-Earnings-Growth Ratio At 2.02 - Equities Focus
Eaton Corporation PLC Ordinary Shares (ETN) is Downgraded by JP Morgan to ...
Highland Mirror - Feb 3, 2017
Eaton Corporation PLC Ordinary Shares (ETN) was Downgraded by JP Morgan to ” Neutral”. Earlier the firm had a rating of “Overweight ” on the company shares.
JP Morgan Downgrades Eaton Corporation PLC Ordinary Shares to Neutral with ... - Morning Outlook
Shares of Eaton Corporation, PLC (ETN) Sees Large Outflow of Money
Energy Index - Feb 24, 2017
Eaton Corporation PLC Ordinary Shares Last issued its quarterly earnings results on Feb 2, 2017. The company reported $1.12 EPS for the quarter, beating the analyst consensus estimate by $ 0.02.
Trending Stocks Exelon Corporation (NYSE:EXC), Eaton Corporation, PLC Ordinary ... - Daily News Journal (press release)
Stock Price of Eaton Corporation, PLC (ETN) Increases 0.89%
Money Flow Index & Trends - Feb 21, 2017
Eaton Corporation PLC Ordinary Shares was Downgraded by JP Morgan to Neutral on Feb 3, 2017. Eaton Corporation PLC Ordinary Shares was Initiated by Avondale on Feb 1, 2017 to Mkt Perform, Price Target of the shares are set at $72.Eaton Corporation ...
Analysts Review on Price Target Estimates: Eaton Corporation, PLC Ordinary ...
Post Registrar - Feb 10, 2017
Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) soared 1.17% during previous trade, a total of 2.02M shares exchanged hands compared with its average trading volume of 2.10M shares whereas its relative volume is 0.87.
Impact of Brokerage Rating on Eaton Corporation, PLC(ETN) - TheFounders Daily
Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) has been downgraded to Hold ... - Breaking Finance News
Dividend Growth of Eaton Corporation, PLC(ETN)
Highland Mirror - Feb 17, 2017
Eaton Corporation, PLC(ETN) formally announced its most recent dividend on October 25, 2016 with a Dividend per share of $0.57. The new ... Eaton Corporation PLC Ordinary Shares was Downgraded by JP Morgan to Neutral on Feb 3, 2017. Eaton ...
Analysts Watch on Price Target Estimates: Eaton Corporation, PLC Ordinary ...
Post Registrar - Feb 9, 2017
Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) plunged -0.37% during previous trade, a total of 2.30M shares exchanged hands compared with its average trading volume of 2.05M shares whereas its relative volume is 0.87.
Stock under Review: Eaton Corporation, PLC Ordinary Shares (NYSE:ETN)
Post Registrar - Nov 19, 2016
Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) plunged -0.99% during previous trade, a total of 4.73M shares exchanged hands compared with its average trading volume of 3.57M shares whereas its relative volume is 1.65.
Analyst Perspectives on Price Target History: Eaton Corporation, PLC Ordinary ...
Post Registrar - Jan 17, 2017
Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) soared 0.67% during previous trade, a total of 1.26M shares exchanged hands compared with its average trading volume of 2.13M shares whereas its relative volume is 0.44.
Eaton Corp. PLC
MarketWatch - Jul 20, 2009
Eaton raises quarterly dividend by 4% to 57 cents a share. 8:34 a.m. Feb. 24, 2016. - Ciara Linnane. Eaton raises quarterly dividend by 4% to 57 cents a ... 10-K: EATON CORP PLC. 4:10 p.m. Feb. 22, 2017. - Edgar Online - (EDG = 10Q, 10K). 10 ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ETN to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ETN's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$72.39 Current Price

$74.79 Growth Price (DCF)

Fairly valued


Growth Rate Assumed by Market: 7.35%


Future Free Cash Flow Growth Rate: 8.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$10.50 Stability Price (EPV)

Overvalued by 85.49%


Discount Rate: 15.0%

$51.20 Book Price

Overvalued by 29.28%


Poor Cash Return on Invested Capital over the past 5 years

ETN has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

ETN has only created $5.94 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 1.07B 1.67B 1.25B 1.87B 2.06B
divided by
Invested Capital 29.31B 28.87B 27.15B 25.96B 24.19B
Cash ROIC 3.65% 5.79% 4.59% 7.18% 8.50%

Growing Return on Equity over the past 5 years

ETN has been growing returns with capital that shareholders have invested. This is a positive sign and demonstrates that both the business and management performance are improving over time.

ETN has generated $11.33 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 1.22B 1.87B 1.80B 1.98B 1.93B
divided by
Stockholders' Equity 15.09B 16.79B 15.79B 15.19B 14.90B
Return on Equity 8.09% 11.15% 11.42% 13.04% 12.92%

Excellent Business Performance over the past 10 years

ETN has been able to maintain profitability in good times and bad. This could mean ETN has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

ETN has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 807.00M 968.00M 1.21B 888.00M 680.00M 1.07B 1.67B 1.25B 1.87B 2.06B

Weak Balance Sheet

ETN's financial position is not ideal. The key is to check whether ETN is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 646.00M 530.00M 773.00M 1.17B 1.08B 1.10B 1.71B 1.03B 445.00M 746.00M
Current Assets 4.77B 4.80B 4.52B 5.51B 5.83B 7.84B 8.73B 8.10B 6.62B 6.94B
Total Assets 13.43B 16.66B 16.28B 17.25B 17.87B 35.85B 35.49B 33.53B 31.03B 30.42B
Current Liabilities 3.66B 3.75B 2.69B 3.23B 3.64B 5.43B 4.91B 5.36B 4.63B 5.49B
Total Liabilities 8.26B 10.34B 9.51B 9.89B 10.40B 20.76B 18.70B 17.74B 15.85B 15.52B
Stockholder' Equity 5.17B 6.32B 6.78B 7.36B 7.47B 15.09B 16.79B 15.79B 15.19B 14.90B
Current Ratio 1.30 1.28 1.68 1.70 1.60 1.44 1.78 1.51 1.43 1.27
TL-to-TA 0.61 0.62 0.58 0.57 0.58 0.58 0.53 0.53 0.51 0.51

Consistent Reinvestment of Profits over the past 10 years

ETN has consistently retained profits. This may put ETN in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, ETN can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 3.26B 3.92B 3.97B 4.45B 5.10B 5.80B 6.86B 7.08B 7.35B 7.50B
Retained Earnings Growth - 20.26% 1.25% 12.13% 14.62% 13.79% 18.33% 3.09% 3.83% 2.07%

Competitive Industry over the past 10 years

ETN is likely operating in an industry with medium to low barriers to entry. This may mean that ETN doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that ETN invests heavily in R&D and Sales, General & Administrative expenses.

Only $7.62 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 994.00M 1.06B 385.00M 937.00M 1.35B 1.22B 1.87B 1.80B 1.98B 1.93B
divided by
Revenue 13.03B 15.38B 11.87B 13.72B 16.05B 16.31B 22.05B 22.55B 20.86B 19.75B
Net Profit Margin 7.63% 6.88% 3.24% 6.83% 8.41% 7.48% 8.50% 7.99% 9.50% 9.75%

Inconsistent Gross Profit Margins over the past 10 years

ETN has good gross profit margins, however inconsistency of these margins is a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$36.28 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 3.65B 4.19B 3.09B 4.08B 15.63B 4.86B 6.68B 6.91B 6.56B 6.35B
divided by
Revenue 13.03B 15.38B 11.87B 13.72B 16.05B 16.31B 22.05B 22.55B 20.86B 19.75B
Gross Margin 28.01% 27.22% 26.03% 29.76% 97.40% 29.81% 30.29% 30.62% 31.47% 32.14%

Medium Capital Intensity over the past 10 years

ETN has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

38.05% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 354.00M 448.00M 195.00M 394.00M 568.00M 593.00M 614.00M 632.00M 506.00M 497.00M
divided by
Net Income 994.00M 1.06B 385.00M 937.00M 1.35B 1.22B 1.87B 1.80B 1.98B 1.93B
Capital Expenditure Ratio 35.61% 42.34% 50.65% 42.05% 42.07% 48.61% 32.78% 35.05% 25.54% 25.82%

Very Strong Dividend History over the past 10 years

ETN has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests ETN is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 251.00M 320.00M 334.00M 363.00M 462.00M 512.00M 796.00M 929.00M 1.03B 1.04B
divided by
Shares Outstanding 150.30M 162.30M 167.90M 339.50M 342.80M 350.90M 476.70M 476.80M 467.10M 456.50M
Dividend Paid Per Share 1.67 1.97 1.99 1.07 1.35 1.46 1.67 1.95 2.20 2.27
Price at Year End 42.72 21.66 30.07 48.82 43.20 53.09 76.01 68.77 52.59 67.09
Dividend Yield 3.91% 9.10% 6.62% 2.19% 3.12% 2.75% 2.20% 2.83% 4.18% 3.39%

History of Stock Buybacks over the past 10 years

ETN has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 150.30M 162.30M 167.90M 339.50M 342.80M 350.90M 476.70M 476.80M 467.10M 456.50M
Stock Bought Back - -7.39% -3.34% -50.54% -0.96% -2.31% -26.39% -0.02% 2.08% 2.32%
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