Eaton Corporation plc (ETN): investment thesis checklist
What a value investor writing down why they own Eaton Corporation plc would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 14.5% in FY2025; between 6.7% and 14.5% over 9 filed years, median 11.8%. Does the thesis need it to stay inside that range?
- Return on equity: 21.0% in FY2025; between 9.4% and 21.0% over 10 filed years, median 14.1%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 2.9% in FY2025; between 2.3% and 7.2% over 10 filed years, median 4.2%. Does the thesis need it to stay inside that range?
- EV to EBIT: 26.04x in FY2025; between 10.26x and 30.24x over 9 filed years, median 25.72x. Does the thesis need it to stay inside that range?
- Price to earnings: 30.48x in FY2025; between 11.83x and 34.93x over 10 filed years, median 27.80x. Does the thesis need it to stay inside that range?
- Gross margin: 37.6% in FY2025; between 30.5% and 38.2% over 10 filed years, median 32.9%. Does the thesis need it to stay inside that range?
- Operating margin: 17.2% in FY2019; between 15.0% and 17.2% over 4 filed years, median 16.3%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 1.85x in FY2019; between 1.60x and 1.99x over 4 filed years, median 1.79x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 9.0% in FY2025; between -3.1% and 9.0% over 10 filed years, median 0.9%. Does the thesis need it to stay inside that range?
- Share count change: -2.0% in FY2025; between -4.0% and 0.1% over 10 filed years, median -2.1%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Eaton Corporation plc's own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.69x
Today 0.55x. Replayed over 10 filed years, it held in every one.
Return on Invested Capital stays at or above 11.6%
Today 14.54%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $4.35
Today $4.40. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.69x.
- A filed year in which return on invested capital fell below 11.6%.
- A filed year in which dividend rate fell below $4.35.
4. The published tests it meets today
Of 30 tests value investors published: 3 met, 26 not met, 1 we could not complete. Counts, never a score.
Meets: ROIC at or above WACC; High return on tangibles; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.