Stock Analysis on Net
Stock Analysis on Net

Eaton Corp. plc (NYSE:ETN)

Common-Size Income Statement 

Eaton Corp. plc, common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net sales 100.00 100.00 100.00 100.00 100.00
Cost of products sold -61.80 -63.64 -66.81 -67.72 -69.48
Gross profit 38.20% 36.36% 33.19% 32.28% 30.52%
Selling and administrative expense -16.39 -16.36 -15.55 -16.59 -17.22
Research and development expense -3.19 -3.25 -3.20 -3.14 -3.09
Gain on sale of businesses 0.00 0.00 0.12 3.14 1.24
Operating income 18.62% 16.75% 14.55% 15.69% 11.45%
Interest expense, net -0.52 -0.65 -0.69 -0.73 -0.83
Other income (expense), net 0.26 0.40 0.17 -0.20 -0.84
Income before income taxes 18.35% 16.50% 14.03% 14.75% 9.78%
Income tax expense -3.09 -2.60 -2.14 -3.82 -1.85
Net income 15.27% 13.89% 11.88% 10.93% 7.92%
Net income for noncontrolling interests -0.02 -0.02 -0.02 -0.01 -0.03
Net income attributable to Eaton ordinary shareholders 15.25% 13.87% 11.86% 10.92% 7.90%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

Gross Profit and Cost of Products Sold
The gross profit margin has shown a consistent upward trend from 30.52% in 2020 to 38.2% in 2024. This improvement is mainly driven by a steady decline in the cost of products sold as a percentage of net sales, which decreased from -69.48% to -61.8%. This indicates enhanced efficiency or cost management in production over the years.
Selling and Administrative Expense
Selling and administrative expenses as a percentage of net sales decreased from -17.22% in 2020 to -15.55% in 2022 but saw a slight increase thereafter, reaching -16.39% in 2024. Despite the minor uptick in the last two years, the general trend over the period indicates relative stability with some cost control measures maintaining expenses below the 2020 level.
Research and Development Expense
Research and development expenses remained relatively stable as a percentage of net sales, fluctuating slightly between -3.09% and -3.25% with a marginal decline to -3.19% in 2024. This suggests sustained investment in innovation or product development, with consistent allocation relative to sales.
Gain on Sale of Businesses
There was a notable gain on sale of businesses in 2020 and 2021, peaking at 3.14% in 2021. However, this income source virtually disappeared in subsequent years, with no gains recorded in 2023 and 2024. The gains in earlier years may have contributed positively to overall profitability but are not a continuing factor.
Operating Income
Operating income as a percentage of net sales increased steadily from 11.45% in 2020 to 18.62% in 2024. This improvement reflects the combined effects of increased gross profit margins and effective control over operational expenses, contributing to stronger core profitability.
Interest Expense and Other Income (Expense), Net
Interest expense decreased progressively from -0.83% to -0.52%, suggesting reduced borrowing costs or improved debt management. Meanwhile, other income (expense) shifted from negative (-0.84% in 2020) to positive territory (0.4% in 2023), followed by a slight decrease to 0.26% in 2024, indicating a gradual improvement in non-operating income sources.
Income Before Income Taxes and Income Tax Expense
Income before income taxes increased markedly from 9.78% in 2020 to 18.35% in 2024, reflecting overall stronger profitability. Income tax expense showed fluctuations, rising to -3.82% in 2021, then decreasing to -2.14% in 2022, and stabilizing around -3.0% in the final years. These movements may reflect changes in taxable income and potentially varying tax rates or strategies.
Net Income and Net Income Attributable to Ordinary Shareholders
Net income as a percentage of net sales demonstrated strong growth over the analyzed period, increasing from 7.92% in 2020 to 15.27% in 2024. The net income attributable to Eaton ordinary shareholders mirrored this trend closely, indicating the company’s profitability improvement benefited shareholders directly. The rise suggests enhanced operational efficiency, effective cost management, and favorable market conditions.
Net Income for Noncontrolling Interests
Net income for noncontrolling interests remained marginal and fairly constant, fluctuating slightly around -0.02%. This suggests minimal impact on overall net income from minority interests.