Eaton (ETN) has eased off its highs after a sharp multiyear climb, with the stock down about 2 % over the past month and roughly 4 % over the past year. This performance is prompting a fresh look at valuation and growth.
See our latest analysis for Eaton.
That recent pullback, including an 11.3% 90-day share price return decline to about $323.67, comes after a powerful multiyear run. It has been highlighted by a roughly 117% three-year total shareholder return that reflects investors steadily repricing Eaton for its growth in electrification and aerospace.
If Eaton’s move has you rethinking where the next leg of industrial growth might come from, it could be worth scanning related names across aerospace and defense stocks for fresh ideas.
With Eaton now trading below analysts’ targets but after an exceptional multiyear run, investors face a key question: Is this a rare chance to buy quality growth at a reasonable price, or is future upside already priced in?
With Eaton’s fair value framed at $410.77 versus a last close of $323.67, the most followed narrative points to meaningful upside driven by structural demand.
Strategic wins and technology leadership in the rapidly expanding data center end market are deepening Eaton’s penetration and raising content per megawatt, with major partnerships (e.g., NVIDIA, Siemens Energy) and acquisitions (Fibrebond, Resilient Power) positioning Eaton as the go-to provider for next-generation high-density and AI-centric infrastructure. This supports outsized revenue growth and structurally higher margins due to a richer, more sophisticated product mix.
Want to see the playbook behind that upside call? The narrative leans on accelerating growth, rising margins and a premium earnings multiple usually reserved for market leaders. Curious which precise assumptions power that $410 plus fair value and how they stack up against today’s price? Dig into the full breakdown to unpack the numbers driving this conviction view.
Result: Fair Value of $410.77 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, slowing AI-driven data center demand or prolonged weakness in vehicle and eMobility could quickly challenge the upside embedded in today’s narrative.
Find out about the key risks to this Eaton narrative.
While the leading narrative sees Eaton as roughly 21% undervalued, our DCF model is far more conservative. It suggests shares at $323.67 sit well above an estimated fair value of $155.37. That gap implies limited margin of safety if growth or margins disappoint.
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 904 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 you see the story differently or want to stress test the numbers yourself, you can build a complete narrative in just minutes: Do it your way.
A great starting point for your Eaton research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
Before you move on, put Eaton in context by scanning other high potential ideas on Simply Wall Street, so you do not miss what the market is overlooking.
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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