Contrasting Eaton (ETN) and Its Competitors

Eaton (NYSE:ETN) is one of 216 public companies in the “Electrical Equipment” industry, but how does it contrast to its peers? We will compare Eaton to related companies based on the strength of its analyst recommendations, earnings, profitability, dividends, valuation, risk and institutional ownership.

Profitability

This table compares Eaton and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eaton	12.75%	24.58%	9.98%
Eaton Competitors	-354.39%	-45.13%	-7.93%

Volatility and Risk

Eaton has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, Eaton’s peers have a beta of -21.36, indicating that their average stock price is 2,236% less volatile than the S&P 500.

Insider & Institutional Ownership

83.0% of Eaton shares are held by institutional investors. Comparatively, 37.4% of shares of all “Electrical Equipment” companies are held by institutional investors. 0.1% of Eaton shares are held by insiders. Comparatively, 15.1% of shares of all “Electrical Equipment” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Eaton and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Eaton	$30.03 billion	$4.09 billion	37.15
Eaton Competitors	$2.41 billion	$142.48 million	20.60

Eaton has higher revenue and earnings than its peers. Eaton is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a summary of recent recommendations and price targets for Eaton and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eaton	0	2	20	1	2.96
Eaton Competitors	2280	5150	7193	434	2.38

Eaton currently has a consensus target price of $484.10, suggesting a potential upside of 32.56%. As a group, “Electrical Equipment” companies have a potential upside of 42.59%. Given Eaton’s peers higher probable upside, analysts plainly believe Eaton has less favorable growth aspects than its peers.

Dividends

Eaton pays an annual dividend of $4.40 per share and has a dividend yield of 1.2%. Eaton pays out 44.8% of its earnings in the form of a dividend. As a group, “Electrical Equipment” companies pay a dividend yield of 1.5% and pay out 27.1% of their earnings in the form of a dividend. Eaton lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Summary

Eaton beats its peers on 11 of the 15 factors compared.

Eaton Company Profile

Eaton Corporation plc operates as a power management company worldwide. The company’s Electrical Americas and Electrical Global segment provides electrical components, industrial components, power distribution and assemblies, residential products, single and three phase power quality and connectivity products, wiring devices, circuit protection products, utility power distribution products, power reliability equipment, and services, as well as hazardous duty electrical equipment, emergency lighting, fire detection, explosion-proof instrumentation, and structural support systems. Its Aerospace segment offers pumps, motors, hydraulic power units, hoses and fittings, and electro-hydraulic pumps; valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems, and nose wheel steering systems; hose, thermoplastic tubing products, fittings, adapters, couplings, and sealing and ducting products; air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, and adapters and regulators; oxygen generation system, payload carriages, and thermal management products; and wiring connectors and cables, as well as hydraulic and bag filters, strainers and cartridges, and golf grips for manufacturers of commercial and military aircraft, and related after-market customers, as well as industrial applications. The company’s Vehicle segment offers transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, locking and limited slip differentials, transmission controls, and fuel vapor components for the vehicle industry. Its eMobility segment provides voltage inverters, converters, fuses, circuit protection units, vehicle controls, power distribution systems, fuel tank isolation valves, and commercial vehicle hybrid systems. Eaton Corporation plc was founded in 1911 and is based in Dublin, Ireland.