# Eaton (ETN) Sector: Electrical equipment | Field | Value | |---|---| | Price | $359.30 | | Market cap | $140B | | Intrinsic value source | Analysts | | Data as of | 2026-11-10 | | Next earnings | 2027-02-03 (estimate) | Analysts: Bullish Picks: Research only Discount category: Pricey ## In short The market doubts that data center demand for Eaton's equipment can last and dislikes its new debt, and growing orders, higher margins and lower debt in 2027 can close the gap within about a year. ## Themes and gap - Themes: AI supplier (ai-supplier), Power and energy (power-energy), High debt (leverage) - Gap type: Can close (closable) - Why: The Q4 2026 report with the 2027 guidance, expected in early February 2027, and the Mobility deal closing in early 2027 are dated tests. ## About Eaton makes equipment that manages electrical power. Its products include switchgear, circuit breakers, power distribution units, uninterruptible power supplies and, since it bought Boyd Thermal in March 2026, liquid cooling for data centers. It sells to data centers, utilities, commercial buildings, industry and homes. It also makes aircraft fuel, hydraulic and power systems, and a Mobility business for vehicles that it plans to combine with Dana. Its segments are Electrical Americas, Electrical Global, Aerospace and Mobility. In Q3 2026, sales were a record $8.9 billion, and Electrical Americas gave $4.2 billion of them. Revenue was $27.4 billion in 2025. Eaton Corporation plc is based in Ireland, and its shares trade on the NYSE. ## Thesis The market doubts that the boom in electrical equipment for data centers can last. Investors fear that spending on AI data centers will slow after the current build, and that orders will then fall. Eaton also took on much debt for growth: it paid $9.55 billion for Boyd Thermal and $1.53 billion for Ultra PCS in 2026, so total debt rose to $20.1 billion. It made no buybacks in the first nine months of 2026. For the gap to close, four things must be true. Orders and backlog must keep growing; in Q3 2026, the twelve-month rolling average of orders grew 39% in Electrical Americas and 51% in Electrical Global, and Electrical backlog grew 46%. Segment margins must keep rising as new capacity starts; they reached a record 25.3% in Q3 2026. Eaton must deliver the 2026 guidance of $13.70 to $13.80 of adjusted EPS. The Mobility deal with Dana must close in the first four months of 2027, and the cash of about $1.1 billion must reduce debt. The Q4 2026 report with the 2027 guidance, expected in early February 2027, gives the next test. If orders stay strong, the gap can close within about a year. ## Checkpoints - Feb 3, 2027 (estimate): Q4 2026 results and 2027 guidance. Status: Pending. Watch: Adjusted EPS of $4.05 or more in Q4, growing orders and 2027 guidance for organic growth near 10% or more pass; falling data center orders or lower margins fail. - Apr 2027 (estimate): Mobility deal with Dana closes. Status: Pending. Watch: A closing in the first four months of 2027 with about $1.1 billion of cash used to cut debt passes; a delay or a failed deal fails. ## Balance sheet - Cash: $818M - Debt: $20.1B - Net debt: $19.3B - Interest cover: 8.0× - Undrawn credit line: $4.0B, to September 2030 - Debt due within 12 months: $2.3B Eaton's total debt was $20.1 billion at September 30, 2026, against $9.9 billion at December 31, 2025. It includes short-term debt of $1.594 billion, mainly commercial paper of $1.592 billion, $710 million of long-term debt due within one year and $17.802 billion of long-term debt. The $8.5 billion of notes issued on March 6, 2026 in six tranches, with coupons from 3.850%, paid for most of the Boyd Thermal purchase. Cash and short-term investments were $818 million. The $4.0 billion revolving credit facility supports the commercial paper program, runs to September 27, 2030 and had no borrowings. Interest cover is income before interest and taxes divided by net interest expense of $505 million for the first nine months of 2026. Eaton expects a cash distribution of about $1.1 billion from the Mobility deal in 2027 and plans to use it partly to repay debt. It also plans to pay €810 million for COL Group in Q1 2027. Free cash flow was $1.03 billion in Q3 2026. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/1551182/000155118226000040/etn-20260930.htm - https://www.sec.gov/Archives/edgar/data/1551182/000155118226000037/etn09302026exhibit99.htm ## Dividends - Dividend yield: 0.9% (last 12 months, at the current price) - Paid per share, last 12 months: $3.30 (3 payments) - Current annual rate: $4.40 ($1.10 x 4 a year) - Payout ratio: 40% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-08-07, $1.10 per share - Growth over the last 5 years: 7.7% a year Dividends per share by year: 2016: $2.28, 2017: $2.40, 2018: $1.32, 2019: $2.84, 2020: $2.263, 2021: $3.04, 2022: $3.24, 2023: $3.44, 2024: $3.76, 2025: $4.16. Source: company filings and market data, read on 2026-11-09. ## Recent events - 2026-11-03: Eaton reported record Q3 2026 results. Sales rose 28% to $8.9 billion, with organic growth of 19%. Segment margins were a record 25.3%. Adjusted EPS was a record $3.68, and GAAP EPS was $2.77. The twelve-month rolling average of orders grew 39% in Electrical Americas, 51% in Electrical Global and 20% in Aerospace. Free cash flow was $1.03 billion. Eaton raised its 2026 guidance to organic growth of 13% to 15% and adjusted EPS of $13.70 to $13.80. - 2026-09-25: Eaton agreed to buy COL Group, an Italian maker of medium-voltage switchgear and power systems, for €810 million. It expects to close the deal in Q1 2027. - 2026-07-31: Eaton reported Q2 2026 results. Sales rose 21% to $8.5 billion, with organic growth of 14%. Adjusted EPS was $3.15. Segment margins were 23.1%, down 80 basis points from a year earlier. Eaton raised its 2026 adjusted EPS guidance to $13.40 to $13.60. - 2026-06-10: Eaton agreed to combine its Mobility business with Dana in a Reverse Morris Trust transaction. Eaton shareholders will own 50.1% of the combined company, and Eaton will get a cash distribution of about $1.1 billion. Eaton expects the deal to close in the first four months of 2027. - 2026-03-12: Eaton completed its purchase of Boyd Thermal, a maker of thermal and liquid cooling systems for data centers and aerospace, for $9.55 billion, net of cash. - 2026-03-06: Eaton issued $8.5 billion of notes in six tranches to pay for Boyd Thermal, and it ended an $8.0 billion term credit agreement that it did not use. - 2026-03-02: Eaton named David Foster as Chief Financial Officer. He replaced Olivier Leonetti, who said in November 2025 that he would leave on April 1, 2026. - 2026-01-26: Eaton said that it plans to separate its Mobility business. - 2026-01-23: Eaton completed its purchase of Ultra PCS, a UK maker of electronic controls for aerospace, for $1.53 billion, net of cash. ## Latest news and filings - Last earnings: 2026-11-03 (8-K: https://www.sec.gov/Archives/edgar/data/1551182/000155118226000037/) - Next earnings: 2027-02-03 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-11-03 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | etn-20260930 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000040/etn-20260930.htm | | 2026-11-03 | 8-K | Earnings release | | etn-20261103 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000037/etn-20261103.htm | | 2026-10-16 | 8-K | Other company news | | etn-20261016 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000034/etn-20261016.htm | | 2026-10-05 | 8-K | Change of directors or officers | | | https://www.sec.gov/Archives/edgar/data/1551182/000114036126038523/ef20083229_8k.htm | | 2026-07-31 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | etn-20260630 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000030/etn-20260630.htm | | 2026-07-31 | 8-K | Earnings release | | etn-20260731 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000027/etn-20260731.htm | | 2026-06-11 | 8-K | Investor disclosure and Other company news | | | https://www.sec.gov/Archives/edgar/data/1551182/000095014226001733/eh260792115_8k.htm | | 2026-05-05 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | etn-20260331 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000013/etn-20260331.htm | | 2026-05-05 | 8-K | Earnings release | | etn-20260505 | https://www.sec.gov/Archives/edgar/data/1551182/000155118226000010/etn-20260505.htm | | 2026-04-23 | 8-K | Shareholder vote results | | | https://www.sec.gov/Archives/edgar/data/1551182/000114036126016399/ef20071273_8k.htm | Every filing on SEC EDGAR (CIK 1551182): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001551182&type=&dateb=&owner=include&count=40 ## Risks - High: Data centers drive much of the growth in orders. If spending on AI data centers slows, orders and backlog can fall, and margins can fall with lower volumes. - Medium: Total debt rose to $20.1 billion at September 30, 2026 from $9.9 billion at December 31, 2025. Higher interest costs lower earnings, and Eaton made no buybacks in 2026. - Medium: Eaton must fit Boyd Thermal, Ultra PCS and COL Group into the company while it adds capacity. Problems can lower margins, as in Q2 2026, when segment margins fell 80 basis points. - Low: The Mobility deal with Dana needs Dana stockholder and regulatory approvals. A delay or a failure can keep a slower business inside Eaton. - Low: Schneider Electric, ABB, Siemens and Vertiv also add capacity for data centers. More competition can lower prices. ## Links - Page: https://picks.utilarium.app/company/ETN/ - History of changes: https://picks.utilarium.app/company/ETN/history/ - JSON with full history: https://picks.utilarium.app/data/company/ETN.json > Picks is a personal record of stock picks. 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