Eaton, one of the leading power management companies, just unveiled a new reference architecture aimed at fast-tracking the use of 800 VDC power in artificial intelligence data centers. This was announced alongside the Open Compute Project Global Summit and highlights Eaton’s role in advancing the energy backbone for AI infrastructure.
See our latest analysis for Eaton.
Eaton’s latest innovation in AI power architecture builds on the company’s recent momentum, which includes major U.S. facility expansions and recognition for cutting-edge smart manufacturing in China. The stock has delivered a 10% total shareholder return over the past year and a 184% total return over three years, highlighting long-term performance strength. The one-month share price return of 2.6% reflects ongoing optimism in the AI-driven energy sector.
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But with shares already near record highs and the promise of AI-driven demand fueling enthusiasm, investors must ask whether Eaton remains undervalued in this new era or if the market has already priced in its growth story.
The latest widely followed narrative sets Eaton’s fair value at $398.71, about 6% above the last close of $375.37. The story driving this upside centers on the company’s role in next-generation electrical and AI infrastructure, combined with strategic wins and high confidence in future growth.
Strategic wins and technology leadership in the rapidly expanding data center end market are deepening Eaton’s penetration and raising content per megawatt. Major partnerships, such as with NVIDIA and Siemens Energy, and acquisitions like Fibrebond and Resilient Power, are positioning Eaton as the go-to provider for next-generation high-density and AI-centric infrastructure. This supports strong revenue growth and structurally higher margins due to a richer, more sophisticated product mix.
Wondering what powers a valuation usually reserved for tech disruptors? This narrative brings together ambitious earnings targets, bold revenue projections, and a confidence in future profit margins that few dare to forecast. Want to see which eyebrow-raising assumptions fuel such a high fair value? Dig into the full narrative to see what’s behind the optimism.
Result: Fair Value of $398.71 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, uncertainty remains, as prolonged weakness in vehicle and eMobility segments or delays in synergy from recent acquisitions could disrupt Eaton’s positive outlook.
Find out about the key risks to this Eaton narrative.
While the earlier valuation relies on analysts’ forecasts and projected earnings multiples, our SWS DCF model presents a different perspective. According to this method, Eaton’s current share price is actually above its estimated fair value, which raises questions about the market’s recent enthusiasm. Does this mean future growth is already reflected in the price, or could the market be overlooking important factors?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Eaton for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.
If these viewpoints spark your curiosity or you trust your own analysis, dive into the data and craft your personal outlook in just minutes. Do it your way
A great starting point for your Eaton research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ETN.
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