Financial Trends -- 8/10
Eaton delivers an exceptional multi-year revenue and earnings compounding story anchored by the
secular electrification/data center megatrend. Total revenue compounded at a ~9% CAGR from
2020-2025 ($17.9B to $27.4B), with the crown jewel Electrical Americas segment growing at a
~15% CAGR. Adjusted EPS grew from $4.24 to $12.07 (23% CAGR). Total segment margins expanded
810 bps over five years (16.4% to 24.5%). Backlog of $19.8B (+25% YoY) provides exceptional
forward visibility. Score held back from a 9 by: (a) deceleration in margin expansion due to
capacity ramp costs, (b) FCF growth stalled at +1% YoY as capex surged, (c) Vehicle and
eMobility segments in decline, and (d) adj EPS growth decelerated to +12% in 2025.
Weight: 25%
FY25 Revenue
$27.4B
+10.3% YoY | Reaccelerating
FY25 Adj EPS
$12.07
+11.8% YoY | 23% 5yr CAGR
Total Segment Margin
24.5%
+50 bps YoY | +810 bps 5yr
Backlog (FY25)
$19.8B
+24.5% YoY | Record high
Annual Financial Summary (FY ends December)
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Total Net Sales ($M) | $17,858M | $19,628M | $20,752M | $23,196M | $24,878M | $27,448M |
| Rev YoY | — | +9.9% | +5.7% | +11.8% | +7.3% | +10.3% |
| GAAP Diluted EPS | $3.49 | $5.34 | $6.14 | $8.02 | $9.50 | $10.45 |
| Adj EPS | $4.24 | $6.62 | $7.57 | $9.12 | $10.80 | $12.07 |
| Adj EPS YoY | — | +56.1% | +14.4% | +20.5% | +18.4% | +11.8% |
| Net Income ($M) | $1,410M | $2,144M | $2,462M | $3,218M | $3,794M | $4,087M |
| Total Seg Margin | 16.4% | 18.9% | 20.2% | 22.0% | 24.0% | 24.5% |
| WA Diluted Shares (M) | 404.0 | 401.6 | 400.8 | 401.1 | 399.4 | 391.2 |
Key trends -- annual
- Revenue compounding at ~9% CAGR: From $17.9B (2020) to $27.4B (2025), driven by Electrical Americas (+15% CAGR) and Aerospace (+14% CAGR)
- Adj EPS compounding at 23% CAGR: Five consecutive years of double-digit growth ($4.24 to $12.07), though growth rate decelerating (56% to 12%)
- Margin expansion story: Total segment margins expanded 810 bps over five years (16.4% to 24.5%), but pace of expansion decelerating (+50 bps in 2025 vs +200 bps in 2024)
- Share count declining: Diluted shares fell from 404M to 391M (-3.2% over 5 years), with meaningful -2.1% reduction in 2025. Buybacks suspended in 2026 due to Boyd Terminal acquisition
Segment Revenue ($M, Annual)
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Elec Americas | $6,680M | $7,242M | $8,497M | $10,098M | $11,436M | $13,276M |
| Elec Global | $4,703M | $5,516M | $5,848M | $6,084M | $6,248M | $6,815M |
| Aerospace | $2,223M | $2,648M | $3,039M | $3,413M | $3,744M | $4,249M |
| Vehicle | $2,118M | $2,579M | $2,830M | $2,965M | $2,790M | $2,505M |
| eMobility | $292M | $343M | $538M | $636M | $662M | $604M |
| Total | $17,858M | $19,628M | $20,752M | $23,196M | $24,878M | $27,448M |
| Segment YoY | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Elec Americas | +8.4% | +17.3% | +18.8% | +13.3% | +16.1% |
| Elec Global | +17.3% | +6.0% | +4.0% | +2.7% | +9.1% |
| Aerospace | +19.1% | +14.8% | +12.3% | +9.7% | +13.5% |
| Vehicle | +21.8% | +9.7% | +4.8% | -5.9% | -10.2% |
| eMobility | +17.5% | +56.9% | +18.2% | +4.1% | -8.8% |
EA reaccelerated from +13.3% to +16.1%, EG inflected from +2.7% to +9.1%,
Aero reaccelerated from +9.7% to +13.5%. All three core growth segments reaccelerating
simultaneously. Vehicle and eMobility remain headwinds (planned mobility spin-off announced),
but they represent only ~17% of total revenue and declining in mix.
Quarterly Revenue Trajectory ($M, 8 Quarters)
| Metric | Q1 24 | Q2 24 | Q3 24 | Q4 24 | Q1 25 | Q2 25 | Q3 25 | Q4 25 |
|---|---|---|---|---|---|---|---|---|
| Total Rev ($M) | $5,943M | $6,350M | $6,345M | $6,240M | $6,377M | $7,028M | $6,988M | $7,055M |
| Total YoY | +8.4% | +8.3% | +7.9% | +4.6% | +7.3% | +10.7% | +10.1% | +13.1% |
| Elec Americas | $2,690M | $2,877M | $2,963M | $2,905M | $3,010M | $3,350M | $3,410M | $3,506M |
| EA YoY | +17.3% | +13.4% | +14.2% | +8.7% | +11.9% | +16.4% | +15.1% | +20.7% |
| Elec Global | $1,500M | $1,606M | $1,573M | $1,569M | $1,610M | $1,753M | $1,724M | $1,728M |
| EG YoY | 0.0% | +2.4% | +4.7% | +3.8% | +7.3% | +9.2% | +9.6% | +10.1% |
| Aerospace | $871M | $955M | $946M | $971M | $979M | $1,080M | $1,079M | $1,111M |
| Aero YoY | +8.5% | +12.6% | +9.1% | +8.5% | +12.4% | +13.1% | +14.1% | +14.4% |
Revenue acceleration is clear: total growth went from +4.6% (Q4 24 trough)
to +13.1% in Q4 25. EA Q4 25 at +20.7% was the strongest quarterly growth in the 2024-2025
period. EG and Aero both showed accelerating quarterly trajectories throughout 2025.
Segment Operating Margins (Annual)
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Elec Americas | 20.2% | 20.6% | 22.5% | 26.5% | 30.2% | 29.9% |
| Elec Global | 15.9% | 18.7% | 19.4% | 19.3% | 18.4% | 19.4% |
| Aerospace | 18.6% | 21.9% | 23.2% | 22.9% | 22.9% | 23.8% |
| Vehicle | 11.5% | 17.4% | 16.0% | 16.3% | 18.0% | 16.7% |
| Total Segment | 16.4% | 18.9% | 20.2% | 22.0% | 24.0% | 24.5% |
- EA margin dipped 30 bps in 2025 (29.9% vs 30.2%) due to ~100-130 bps capacity ramp headwind -- still remarkable given the scale of investment. Without ramp costs, underlying EA margin would be ~31%
- EG margin recovered to 19.4% (matching 2022 level), inflecting positively after two years of compression
- Aero margin expanded to 23.8%, a new high, +90 bps YoY
- Total segment margin expansion pace decelerating: +50 bps in 2025 vs +200 bps in 2024 vs +180 bps in 2023
Segment Operating Profit ($M) & Margins (Quarterly)
| Metric | Q1 24 | Q2 24 | Q3 24 | Q4 24 | Q1 25 | Q2 25 | Q3 25 | Q4 25 |
|---|---|---|---|---|---|---|---|---|
| EA Op Profit | $785M | $859M | $892M | $918M | $904M | $987M | $1,034M | $1,046M |
| EA Margin | 29.2% | 29.9% | 30.1% | 31.6% | 30.0% | 29.5% | 30.3% | 29.8% |
| EG Op Profit | $274M | $305M | $294M | $277M | $300M | $353M | $330M | $340M |
| EG Margin | 18.3% | 19.0% | 18.7% | 17.7% | 18.6% | 20.1% | 19.1% | 19.7% |
| Aero Op Profit | $201M | $206M | $230M | $222M | $226M | $240M | $280M | $268M |
| Aero Margin | 23.1% | 21.6% | 24.3% | 22.9% | 23.1% | 22.2% | 26.0% | 24.1% |
| Total Seg Profit | $1,371M | $1,502M | $1,544M | $1,542M | $1,522M | $1,682M | $1,749M | $1,760M |
| Total Seg Margin | 23.1% | 23.7% | 24.3% | 24.7% | 23.9% | 23.9% | 25.0% | 24.9% |
EA margin compression from ramp costs is the key negative.
EA margin YoY change went from +630 bps (Q1 24) to -177 bps (Q4 25) as capacity ramp costs
intensified. Total segment margin expansion decelerated sharply to near-zero by Q4 25. However,
management guides 24.6-25.0% segment margins for 2026 (up ~30 bps YoY at midpoint) as ramp
costs abate.
Earnings Per Share (Quarterly)
Adj EPS growth decelerated to +8% in Q2-Q3 25 before re-accelerating
to +17.7% in Q4 25. The mid-year slowdown reflects capacity ramp costs hitting margins while
below-the-line items (higher interest expense, less buyback benefit) also weighed. 2026 guidance:
adj EPS $13.00-$13.50 (midpoint $13.25, +10% YoY). Buybacks suspended in 2026 due to Boyd
acquisition, removing ~1-2% annual EPS tailwind.
Total Backlog ($B)
Backlog growth reaccelerated from +6.7% (Q1 25) to +24.5% (Q4 25)
-- extraordinary demand visibility. EA backlog at record $13.2B (+31% YoY). Data center
orders accelerated ~200% YoY in Q4 25. Book-to-bill at 1.2x quarterly for EA. Mega project
backlog up 30% to $3 trillion tracked, 866 projects. Negotiations pipeline up to nearly
$10B in EA (4x since 2019).
Free Cash Flow ($M)
FCF growth essentially stalled in 2025 at +1%. Capex surged
14% ($919M vs $808M) while operating cash flow grew only modestly (+3.3%). FCF conversion was
~87% of net income in 2025 vs ~93% in 2024. This is the most concerning data point. However,
2026 FCF guidance of $3.9-4.3B (midpoint $4.1B, +14% YoY) suggests meaningful improvement
as capacity ramp investments wind down.
Share Count & Buybacks
- Meaningful share reduction in 2025: -2.1% YoY (399M to 391M), supported by $1.86B in buybacks
- Buybacks suspended in 2026 due to Boyd Terminal acquisition financing, removing ~1-2% of annual EPS growth tailwind
- Five-year share count trend: 404M (2020) to 391M (2025), -3.2% cumulative
Acceleration / Deceleration Analysis
| Revenue Growth Change | 2023 vs 2022 | 2024 vs 2023 | 2025 vs 2024 | Direction |
|---|---|---|---|---|
| Total Revenue | +6.1 pp | -4.5 pp | +3.0 pp | Reacceleration |
| Elec Americas | +1.5 pp | -5.5 pp | +2.8 pp | Reacceleration |
| Elec Global | -2.0 pp | -1.3 pp | +6.4 pp | Reacceleration |
| Aerospace | -2.5 pp | -2.6 pp | +3.8 pp | Reacceleration |
| Backlog Growth | -34.1 pp | +8.3 pp | +2.2 pp | Accelerating |
| Margin / Earnings | 2023 | 2024 | 2025 | Direction |
|---|---|---|---|---|
| Total Seg Margin YoY | +180 bps | +200 bps | +50 bps | Decelerating |
| EA Margin YoY bps | +400 bps | +370 bps | -30 bps | Negative (ramp) |
| Adj EPS Growth | +20.5% | +18.4% | +11.8% | Decelerating |
| FCF Growth | +48.2% | +22.7% | +1.0% | Sharp decel. |
Revenue reaccelerating across all core segments while margins and
earnings growth decelerate -- classic capacity investment phase. The divergence between
accelerating revenue/backlog and decelerating margins/FCF reflects ~$1.5B invested across ~24
capacity expansion projects. Half completed mid-2025, remaining half largely by mid-2026. The
setup for 2027+ is exceptional as ramp costs abate and new capacity comes online.
Penalty / Modifier Assessment
| Factor | Impact | Detail |
|---|---|---|
| Revenue reacceleration (EA, EG, Aero) | +1.0 | Total rev growth highest since 2023; all core segments reaccelerating |
| Backlog reaccelerating to +24.5% | +0.5 | Record $19.8B, extraordinary forward visibility |
| Data center order explosion | +0.5 | +200% Q4 orders, mega-project pipeline $3T, 11yr DC construction backlog |
| Mobility spin-off | +0.5 | Will be accretive to growth and margin profile |
| Margin expansion decelerating / EA contracting | -0.5 | Capacity ramp costs creating ~130 bps headwind in 2026 EA |
| FCF growth stalled (+1%) | -0.5 | Capex surge absorbing operating cash flow growth |
| EPS growth deceleration to +12% | -0.5 | Mid-year Q2-Q3 only +8%, though Q4 re-accelerated to +18% |
| Vehicle/eMobility in decline | -0.5 | ~17% of revenue declining; mitigated by planned spin-off |
| Buyback suspension in 2026 | -0.5 | Removes ~1-2% annual EPS tailwind |
Score rationale
Score of 8/10 reflects an exceptional multi-year revenue and earnings compounding story anchored by the secular electrification/data center megatrend, tempered by near-term deceleration in earnings momentum and margin expansion.
Positives (supports 8+):
- Five consecutive years of double-digit adj EPS growth ($4.24 to $12.07)
- Revenue reaccelerating across all three core segments (EA, EG, Aero)
- Record backlog of $19.8B reaccelerating to +24.5% growth
- Extraordinary data center demand (+200% Q4 orders) with multi-year visibility
- Total segment margins at 24.5%, up 810 bps over five years
- 5-year revenue CAGR of ~9% with improving mix toward higher-growth segments
Negatives (prevents 9):
- Adj EPS growth decelerated from +18% to +12% in 2025; guided +10% in 2026
- FCF growth stalled at +1% in 2025 due to capex surge
- EA margin contracted 30 bps YoY (ramp costs); further 130 bps headwind expected in 2026
- Vehicle (-10%) and eMobility (-9%) segments declining (17% of revenue)
- Share buybacks suspended in 2026
- Total segment margin expansion pace decelerating sharply (+50 bps vs +200 bps prior year)
Data sourced from Daloopa (company_id: 365) and ETN earnings releases (Q3 2024 through Q4 2025). All financials in USD. Fiscal year ends December.