Eaton Corp PLC

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ETN : NYSE : Industrial Goods
$65.71 up 1.55 | 2.42%
Today's Range: 64.43 - 66.21
Avg. Daily Volume: 2,308,600
09/30/16 - 4:03 PM ET

Financial Analysis


EATON CORP PLC's gross profit margin for the second quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, however the growth has outpaced the average competitor within the industry. EATON CORP PLC has weak liquidity. Currently, the Quick Ratio is 0.85 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 2.74% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q2 FY16 Q2 FY15
Net Sales ($mil)5080.05372.0
EBITDA ($mil)850.0873.0
EBIT ($mil)616.0639.0
Net Income ($mil)491.0535.0


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)469.0430.0
Total Assets ($mil)31154.032579.0
Total Debt ($mil)8414.08751.0
Equity ($mil)15320.015753.0


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin37.3235.95
EBITDA Margin16.7316.25
Operating Margin12.1311.9
Sales Turnover0.650.67
Return on Assets6.016.7
Return on Equity12.2213.86
Debt Q2 FY16 Q2 FY15
Current Ratio1.421.51
Debt/Capital0.350.36
Interest Expense57.059.0
Interest Coverage10.8110.83


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)454.7467.5
Div / share0.570.55
EPS1.071.14
Book value / share33.6933.7
Institutional Own % n/a n/a
Avg Daily Volume2518359.02331921.0

Valuation


BUY. This stock's P/E ratio indicates a discount compared to an average of 23.68 for the Electrical Equipment industry and a discount compared to the S&P 500 average of 25.19. To use another comparison, its price-to-book ratio of 1.90 indicates a discount versus the S&P 500 average of 2.82 and a significant discount versus the industry average of 4.10. The price-to-sales ratio is below the S&P 500 average and is well below the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, EATON CORP PLC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
ETN 15.79 Peers 23.68   ETN 10.31 Peers 13.13

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

ETN is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

ETN is trading at a discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
ETN 14.02 Peers 19.64   ETN 9.57 Peers 3.27

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

ETN is trading at a discount to its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

ETN trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
ETN 1.90 Peers 4.10   ETN -12.13 Peers -16.98

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

ETN is trading at a significant discount to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

ETN is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
ETN 1.45 Peers 2.09   ETN -7.93 Peers -0.93

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

ETN is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

ETN significantly trails its peers on the basis of sales growth

 

 

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