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IndustrialsEaton Corporation
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XBRL · SEC EDGAR2010–2025(16yr)| Metric | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $13.7B | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $20.4B | $21.6B | $21.4B | $17.9B | $19.6B | $20.8B | $23.2B | $24.9B | $27.4B | +10.3% |
| Gross Profit | $4.1B | -$11.3B | -$11.4B | -$15.4B | -$15.6B | -$14.3B | -$13.4B | $6.6B | $7.1B | $7.1B | $5.5B | $6.3B | $6.9B | $8.4B | $9.5B | $10.3B | +8.6% |
| Gross Margin | 29.8% | — | — | — | — | — | — | 32.6% | 32.8% | 33.0% | 30.5% | 32.3% | 33.2% | 36.4% | 38.2% | 37.6% | -0.6pp |
| Operating Income | $1.7B | $2.3B | $2.2B | $3.2B | $3.3B | $3.1B | $3.0B | $3.2B | $3.6B | $3.7B | — | — | — | — | — | — | — |
| Operating Margin | 12.4% | — | — | — | — | — | — | 15.8% | 16.8% | 17.2% | — | — | — | — | — | — | — |
| Net Income | $929.0M | $1.4B | $1.2B | $1.9B | $1.8B | $2.0B | $1.9B | $3.0B | $2.1B | $2.2B | $1.4B | $2.1B | $2.5B | $3.2B | $3.8B | $4.1B | +7.7% |
| Net Margin | 6.8% | — | — | — | — | — | — | 14.6% | 9.9% | 10.3% | 7.9% | 10.9% | 11.9% | 13.9% | 15.3% | 14.9% | -0.4pp |
| Free Cash Flow | $888.0M | $680.0M | $1.1B | $1.7B | $1.2B | $1.9B | $2.1B | $2.1B | $2.1B | $2.9B | $2.6B | $1.6B | $1.9B | $2.9B | $3.5B | $3.6B | +1.0% |
| FCF Margin | 6.5% | — | — | — | — | — | — | 10.5% | 9.7% | 13.4% | 14.3% | 8.1% | 9.3% | 12.4% | 14.1% | 12.9% | -1.2pp |
| EPS (Diluted) | $2.73 | $3.93 | $3.46 | $3.90 | $3.76 | $4.23 | $4.21 | $6.68 | $4.91 | $5.25 | $3.49 | $5.34 | $6.14 | $8.02 | $9.50 | $10.45 | +10.0% |
1. THE BIG PICTURE
Eaton is no longer a traditional industrial conglomerate; it has repositioned itself as the primary architect of the "chip to grid" electrical value chain. By aggressively acquiring specialized technologies in liquid cooling and modular data centers while simultaneously scheduling the exit of its legacy Mobility business, Eaton is tethering its future almost entirely to the megatrends of reindustrialization and data center expansion.
2. WHERE THE RISKS HIT HARDEST
Eaton’s "strong competitive position" in electrical power management (10-K Item 1) is increasingly dependent on a "Lead, Invest and Execute" strategy that relies on constant acquisitions, such as Boyd Thermal and Fibrebond. This strategy is directly threatened by the risk of Strategic Transactions, where integration challenges or unforeseen liabilities could lead to the very earnings dilution and cash flow impacts management warns about (Risks). Furthermore, Eaton Corporation’s focus on Megaprojects in North America (10-K Item 1) creates a geographic concentration that could be undermined by Operational Disruptions or labor shortages, which Eaton notes can lead to production stoppages and the permanent loss of customer relationships (Risks).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a company operating at two different speeds. While Eaton leads its peer group in revenue growth at 10.3% (XBRL), its Free Cash Flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin of 11.6% is the lowest among its competitors, trailing the 22.6% seen at AMETEK (Peer Benchmarking). This suggests that while Eaton is winning the race for scale and market share in the electrical and aerospace sectors, it has yet to convert that growth into the same level of cash efficiency as its peers.
The divergence in segment performance is stark: Electrical Americas grew 21% in the most recent quarter, while the Vehicle and eMobility segments saw organic sales contract by 13% and 17%, respectively (8-K). This performance gap validates the decision to spin off the Mobility business by 2027, as the legacy automotive exposure is currently a drag on an otherwise record-breaking electrical portfolio. A book-to-bill ratio of 1.1 (8-K) suggests that demand is still outstripping supply, supporting the credibility of Eaton Corporation’s 7–9% organic growth guidance for 2026.
4. IS IT WORTH IT AT THIS PRICE?
At a Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 23.6x, Eaton trades at a modest discount to the peer median of 25.8x (Peer Benchmarking). According to the (CAPM analysis), the market is currently pricing in approximately 6.7% long-term growth. This appears conservative when compared to Eaton’s actual TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth of 10.3% and its 2026 organic growth guidance of 7–9%.
The valuation is supported by a strong buyback yield of 1.8%, which is the second-highest in the peer group. However, the sensitivity analysis suggests that if growth were to slow to a base rate of 5.0%, the justified multiple would drop to 16.9x. The current premium is justified only if Eaton maintains its lead in revenue growth and successfully executes the Mobility spin-off without the "management distraction" or "restructuring costs" cited in its risk disclosures.
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if the book-to-bill ratio falls below 1.0, signaling that the post-pandemic backlog of megaprojects is finally cooling.
- Constructive if FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margins begin to climb toward the 14% peer average, proving that the recent acquisitions (Boyd Thermal, Fibrebond) are becoming highly cash-generative.
- Cautious if the Mobility spin-off is delayed beyond Q1 2027, as this would keep lower-margin, declining assets on the balance sheet for longer than anticipated.
6. BOTTOM LINE
Structural Advantage: Eaton’s "chip to grid" integration provides a unique cost and technology advantage in the high-growth data center and utility markets. Bottom Line: Eaton is a top-tier growth play in the electrical sector that remains attractively valued relative to its peers, provided it can fix its lagging cash flow conversion.
1. Top 5 Material Risks
- Strategic Transactions: Eaton Corporation pursues acquisitions and joint ventures that involve significant cash expenditures and debt incurrences. These transactions risk diluting earnings and negatively impacting cash flow due to integration challenges, unforeseen liabilities, and the diversion of management attention.
- Operational Disruptions: With manufacturing facilities worldwide, Eaton Corporation is exposed to production stoppages caused by natural disasters, war, geopolitical instability, or public health emergencies. Such events threaten the timely shipment of products and the loss of customer relationships.
- Supply Chain and Inflation: Persistent labor shortages and commodity price volatility impact the cost of raw materials and components. If Eaton Corporation cannot pass these costs to customers through pricing or product modifications, operating results will suffer.
- Cybersecurity and IT Infrastructure: Eaton Corporation relies on complex IT networks for procurement, manufacturing, and invoicing. A material cybersecurity incident could result in the theft of intellectual property, disruption of operations, and exposure to significant fines or legal claims.
- Mobility Business Spin-off: The intended separation of the Mobility business by the end of the first quarter of 2027 carries risks of unforeseen dis-synergy costs, tax liabilities, and potential negative reactions from financial markets if the timeline is not met.
2. Company-Specific Risks
- Artificial Intelligence Integration: Failure to keep pace with AI technological developments could erode the competitive position of Eaton Corporation, while the adoption of generative AI tools introduces new risks regarding data privacy, intellectual property leakage, and compliance costs.
- Single-Source Supplier Reliance: Eaton Corporation maintains single-source relationships for certain components to ensure quality and performance. Unavailability or delivery delays for these specific items would have a more severe impact on Eaton Corporation's higher-volume and more profitable products.
- Government Contracting: As a supplier to the U.S. government, Eaton Corporation is subject to unique audits and acquisition regulations. Findings of wrongdoing could lead to contract termination or debarment from future bidding.
- Technological Obsolescence: Eaton Corporation’s success depends on the research and development of new products. If Eaton Corporation fails to anticipate shifts in customer preferences or industry trends, it may be unable to recoup the high costs associated with its innovation pipeline.
3. Regulatory/Legal Risks
- Data Protection Regulations: Eaton Corporation is subject to global privacy laws, including the General Data Protection Regulation (GDPR), which can impose fines of up to four percent of global revenue for certain violations.
- Trade Policy and Tariffs: Changes in international trade policies, including the imposition of tariffs or sanctions, can increase the cost of imported goods. If Eaton Corporation cannot mitigate these costs, product margins and overall financial performance may decline.
- Tax Audits: Eaton Corporation operates in multiple jurisdictions and is subject to ongoing tax audits. The ultimate resolution of these controversies could result in assessments that differ from reserved amounts, impacting the consolidated financial statements.
4. Financial Impact Map
Strategic Acquisitions → Cash Flow / Earnings → Potential for dilution and operating losses from integration challenges. Operational Disruptions → Sales / Revenue → Loss of sales and customers due to inability to ship products. Supply Chain Inflation → Operating Results / Product Margins → Inability to recoup increased raw material and labor costs. Cybersecurity Incident → Intellectual Property / Operating Expenses → Costs associated with data theft, legal claims, and regulatory fines. Mobility Spin-off → Stock Price / Restructuring Costs → Potential for negative market reaction and unforeseen dis-synergy expenses.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-K | Feb 2026 | Dec 2025 |
| 8-K | Feb 2026 | — |
| 10-Q | Nov 2025 | Sep 2025 |
| 14A | Mar 2025 | — |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Eaton Q1 EPS $2.81 beats estimates, revenue $7.5B up 17% on AI demand
- ▸Q1 EPS $2.81, exceeding consensus estimate of $2.73
- ▸Revenue $7.5B, up 17% YoY and beating $7.1B estimate
- ▸Record quarterly earnings driven by strong AI-related power demand
- ▸Full-year guidance outlook disappointed investors despite strong quarterly performance
- ▸Shares declined following the release of forward-looking guidance
Eaton Q1 adjusted EPS $2.00 beats estimates, FY guidance misses expectations
- ▸Q1 adjusted EPS $2.00, exceeding analyst expectations
- ▸Stock fell over 3% in premarket trading following results
- ▸Full-year guidance issued slightly below consensus forecasts
- ▸Power management segment performance drove quarterly beat
- ▸Market reaction reflects caution over forward-looking outlook
Eaton Q1 Earnings Beat Estimates But Shares Decline on Profit-Taking
- ▸Q1 earnings per share exceeded analyst expectations
- ▸Revenue growth driven by strong demand in electrical and aerospace segments
- ▸Stock price declined despite positive financial performance
- ▸Market reaction suggests profit-taking following recent rally
- ▸Company maintains strong outlook for remainder of fiscal year
Eaton Q1 Revenue $7.45B Beats Estimates by 5.2%, EPS $2.81 Tops Consensus
- ▸Q1 revenue $7.45B, +16.9% YoY, beating estimates of $7.1B
- ▸Q1 EPS $2.81, +3.3% YoY, beating consensus estimate of $2.74
- ▸Electrical Americas segment sales $3.6B, +20% YoY
- ▸Aerospace segment sales $1.14B, +16% YoY
- ▸Backlog increased 44% in Electrical Americas and 73% in Electrical Global
Eaton raises quarterly dividend 6% to $1.10; explores $5B vehicle unit spinoff
- ▸Quarterly dividend increased 6% to $1.10 per share
- ▸Exploring potential sale or spinoff of vehicle unit valued at ~$5B
- ▸David Foster appointed CFO effective March 2, 2026
- ▸Analysts adjust price targets following Q4 earnings and valuation resets
- ▸Dividend payable March 27, 2026 to shareholders of record March 10, 2026