Eaton Corporation PLC: Back on track, Beat and raise

Research evidence excerpt

Eaton Corporation PLC: Back on track, Beat and raise

Forecast returns

Forecast price appreciation -7.0%

Forecast dividend yield 1.2%

Forecast stock return -5.8%

Market return assumption 9.2%

Forecast excess return -15.0%

Company Description

Eaton provides energy efficient solutions to assist customers in effectively managing electrical

and mechanical power more reliably, safely, and sustainably. It operates in five business

segments: Electrical Americas, Electrical Global, Aerospace, Vehicle, and eMobility.

Valuation Method and Risk Statement

Our price target is based on forward P/E.

Risk Statement: The Electrical Equipment and Multi Industry sector faces a broad range of

risks. It is cyclical in nature with exposure to the underlying cycles inherent in everything from

aviation, auto, trucking and trains to construction and consumer electronics to mining,

power, oil and gas and more depending on the specific stock. EEMI companies are subject to

risks associated with unexpected changes in the underlying global macro environment,

currency and interest rate movements, commodity price inflation as well as company-specific

execution, M&A, integration, labor relations and changes in the competitive or regulatory

environment. These changes can be in the form of product technology, e-commerce and

other digital disruption and/or channel disintermediation. Capacity and related pricing

pressures are also a risk through the cycle. Finally, these multinational companies are subject

to policy changes taking place in the United States and internationally, including those related

to environmental regulation and tariffs.

Company specific risks include slowing growth and misexecution as management invests in

additional capacity to execute on growth.