For most investors, how much a stock’s price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you’d invested in Eaton (ETN) ten years ago? It may not have been easy to hold on to ETN for all that time, but if you did, how much would your investment be worth today?
Eaton’s Business In-Depth
With that in mind, let’s take a look at Eaton’s main business drivers.
Dublin, Ireland-based Eaton Corporation plc is a diversified power management company and a global technology leader in electrical components and systems. It sells products in more than 175 countries and has in excess of 85,000 employees. The company was founded in 1911.
Eaton’s current reportable segments post closure of the Hydraulics segment on Aug 2, 2021, are Electrical Americas, Electrical Global, Aerospace, Vehicle and eMobility.
The Electrical Americas segment includes sales contracts that are primarily for electrical and industrial components, power distribution and assemblies, residential products, single and three-phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, as well as services that are primarily produced and sold in North and South America. The Electrical Global segment consists of the same activities as mentioned in Electrical Americas but is primarily produced and sold outside of North and South America.
The Vehicle segment includes the Truck and Automotive subsegments. The truck segment designs, manufactures and markets powertrain systems and other components for commercial vehicle markets. The aerospace segment is a supplier of aerospace fuel and hydraulic and pneumatic systems for commercial and military use.
The eMobility segment focuses on two technologies within electric vehicles, namely Power electronics & conversion and Power distribution & circuit protection.
Eaton’s segments — Electrical Americas, Electrical Global, Aerospace, Vehicle and eMobility — contributed 44.8%, 25.4%, 15%, 12% and 2.8%, respectively, to 2023 revenues.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Eaton, if you bought shares a decade ago, you’re likely feeling really good about your investment today.
A $1000 investment made in March 2014 would be worth $3,923.79, or a 292.38% gain, as of March 6, 2024, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 171.03% and the price of gold went up 51.49% over the same time frame.
Going forward, analysts are expecting more upside for ETN.
Eaton’s ongoing research and development are allowing the company to develop new products to provide efficient power management solutions. It will benefit from improving end-market conditions, increasing demand from the new AI data center and contributions from its organic assets. It is expanding via acquisitions and its rising backlog shows demand for its products. Our model expects revenues to increase in 2024-2026 period. Its strategy to manufacture in the region of its end market has helped it cut costs. Its shares have outperformed the industry in the last year. Yet, Eaton’s global operations expose it to unpredictable currency translation, cyber security threats, changes in tax rates and security breaches, which might impact operations. The shortage of raw materials and supplier insolvencies might impact production and operations.
Shares have gained 7.68% over the past four weeks and there have been 6 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.
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Eaton Corporation, PLC (ETN) : Free Stock Analysis Report