ETN – Market expectations are for Uniform ROA to expand, but management may have concerns about operating margins, growth and their business lines
March 25, 2022
- Eaton Corporation plc (ETN) currently trades below corporate and historical averages relative to Uniform earnings, with a 21.1x Uniform P/E (Fwd. V/E’).
- At these levels, markets are pricing in expectations for Uniform ROA to expand to new peaks of 25%, accompanied by 3% Uniform asset growth.
- Similarly, analysts expect Uniform ROA to improve to 25% in 2022, accompanied by 2% Uniform asset growth.
- If sustained going forward, these levels would imply a stock price closer to $151, representing approximately 2% equity downside for the firm.
- Moreover, the firm’s most recent earnings call suggests management may have concerns about operating margins, growth and their business lines.
