Don't Take a Position in Eaton Stocks Without Knowing Its Fundamentals!

Now trading at a price of $164.0, Eaton has moved 2.97% so far today. In contrast, the S&P 500 index moved 1.61%. Read below for a basic value analysis of Eaton.

Eaton shares moved 6.08% over the last 52 weeks, with a high of $178.75 and a low of $120.62. During this time, the stock outperformed the S&P 500 index by 17.86%. As of January 2022, the company's 50-day average price is $167.0. Eaton Corporation plc is an American Irish-domiciled multinational power management company with 2020 sales of 17. The large-cap Industrials company is based in Dublin, None. Eaton has returned a 2.03% dividend yield over the last 12 months.

Snapshot of the Company's Consistent Operating Margins in Line With the 13.8% Industry Average:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $21,230 $18,008 $20,114 $20,562
Revenue Growth n/a -15.18% 11.69% 2.23%
Gross Margins 32.46% 31.1% 33.91% 32.57%
Gross Margins Growth n/a -4.19% 9.04% -3.95%
Operating Margins 17.31% 7.89% 12.07% 11.47%
Operating Margins Growth n/a -54.42% 52.98% -4.97%
Earnings Per Share $5.35 $3.54 $5.38 $6.19
EPS Growth n/a -33.83% 51.98% 15.06%
Diluted Shares (MM) 413 398 399 398
Free Cash Flow (MM) $2,864 $2,555 $1,588 $1,935
FCF Growth n/a -10.79% -37.85% 21.85%
Capital Expenditures (MM) $587 $389 $575 $598
Net Debt / EBITDA 2.53 3.4 2.38 2.46

Eaton Is Too Expensive at Current Levels:

Compared to the Industrials sector's average of 20.49, Eaton has a trailing twelve month P/E ratio of 26.28 and, according to its EPS guidance of 9.16, an expected P/E ratio of 17.9. Eaton's PEG ratio is 1.51 based on its 17.4% annual average growth rate of historical and projected earnings per share. This suggests that the company's shares are overvalued.

The market is giving Eaton a fair value in terms of its book value, since its P/B ratio of 3.994 is consistent with its sector average, which stands at 3.78. The company's shares are currently trading 133.92% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 5.1 * 42.83) = $70.11

Eaton Is the Subject of Mixed Market Indicators:

17 analysts are following Eaton and have set target prices ranging from $148.0 to $210.0 per share. On average, they have given the company a rating of buy. At the current price of $164.0, ETN is trading -11.6% away from its average analyst target price of $185.53 per share, implying an analyst consensus of some upside potential for the stock.

The company has a very low short interest since 1% of the company's shares are tied to short positions. Institutions own 84% of Eaton's shares, while the insider ownership rate stands at 0%. The biggest shareholder is None with a None stake in the company worth approximately None.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.