Now trading at a price of $211.61, Eaton has moved 1.4% so far today.
Eaton returned gains of 55.0% last year, with its stock price reaching a high of $240.44 and a low of $134.81. Over the same period, the stock outperformed the S&P 500 index by 35.0%. More recently, the company's 50-day average price was $219.07. Eaton Corporation plc operates as a power management company worldwide. Based in Dublin, Ireland, the large-cap Industrials company has 92,000 full time employees. Eaton has offered a 1.6% dividend yield over the last 12 months.
Overview of the Company's Finances:
| 2018-02-28 | 2019-02-27 | 2020-02-26 | 2021-02-24 | 2022-02-23 | 2023-02-23 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $20,404 | $21,609 | $21,390 | $17,858 | $19,628 | $20,752 |
| Gross Margins | 33.0% | 33.0% | 33.0% | 31.0% | 32.0% | 33.0% |
| Operating Margins | 12% | 14% | 13% | 10% | 13% | 14% |
| Net Margins | 15.0% | 10.0% | 10.0% | 8.0% | 11.0% | 12.0% |
| Net Income (MM) | $2,985 | $2,145 | $2,211 | $1,410 | $2,144 | $2,462 |
| Net Interest Expense (MM) | -$246 | -$258 | -$199 | -$149 | -$144 | -$144 |
| Depreciation & Amort. (MM) | -$914 | -$903 | -$884 | -$811 | -$922 | -$954 |
| Earnings Per Share | $6.68 | $4.91 | $5.25 | $3.49 | $5.33 | $6.14 |
| EPS Growth | n/a | -26.5% | 6.92% | -33.52% | 52.72% | 15.2% |
| Diluted Shares (MM) | 447 | 437 | 421 | 404 | 402 | 401 |
| Free Cash Flow (MM) | $3,186 | $3,223 | $4,049 | $3,321 | $2,694 | $2,968 |
| Capital Expenditures (MM) | -$520 | -$565 | -$598 | -$377 | -$531 | -$435 |
| Net Current Assets (MM) | -$6,996 | -$7,357 | -$7,942 | -$7,671 | -$10,065 | -$9,195 |
| Long Term Debt (MM) | $7,167 | $6,768 | $7,819 | $7,010 | $6,831 | $8,321 |
| Net Debt / EBITDA | 1.93 | 1.83 | 2.06 | 2.64 | 2.37 | 2.05 |
Eaton has weak revenue growth and a flat capital expenditure trend, flat EPS growth, and irregular cash flows. The company's financial statements also display just enough current assets to cover current liabilities and significant leverage. We also note that the company has average operating margins with a stable trend working in its favor. However, the firm has slimmer gross margins than its peers.
Eaton Has Elevated P/B and P/E Ratios:
Eaton has a trailing twelve month P/E ratio of 32.3, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $9.81, the company has a forward P/E ratio of 22.3. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -1.4%. On this basis, the company's PEG ratio is -23.16, which indicates that its shares are overpriced. Furthermore, Eaton is likely overvalued compared to the book value of its equity, since its P/B ratio of 4.7 is higher than the sector average of 3.78. The company's shares are currently trading 175.8% above their Graham number.
There's an Analyst Consensus of Some Upside Potential for Eaton:
The 18 analysts following Eaton have set target prices ranging from $185.0 to $270.0 per share, for an average of $232.22 with a buy rating. As of April 2023, the company is trading -5.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Eaton has a very low short interest because 1.0% of the company's shares are sold short. Institutions own 85.2% of the company's shares, and the insider ownership rate stands at 0.27%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $7,651,635,849.
