Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
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Profitability Ratios (Summary)
Eaton Corp. plc, profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 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).
The profitability metrics demonstrate a consistent upward trend over the observed period. Improvements are evident across all measured ratios, suggesting increasing efficiency in converting revenue into profit and generating returns for shareholders and investors.
- Gross Profit Margin
- The gross profit margin exhibited an initial increase from 32.28% in 2021 to 33.19% in 2022. This upward momentum continued, reaching a peak of 38.20% in 2024, before experiencing a slight retraction to 37.59% in 2025. This indicates improving cost of goods sold management, though the most recent period suggests potential stabilization or minor cost pressures.
- Operating Profit Margin
- The operating profit margin followed a similar pattern of growth, rising from 15.69% in 2021 to 18.62% in 2024. A further increase to 18.98% was observed in 2025, representing the highest value in the series. This suggests effective control of operating expenses alongside revenue growth.
- Net Profit Margin
- The net profit margin demonstrated the most substantial proportional increase, moving from 10.92% in 2021 to 15.25% in 2024. While still positive, the margin decreased slightly to 14.89% in 2025. This indicates improved overall profitability after accounting for all expenses, including taxes and interest.
- Return on Equity (ROE)
- Return on equity experienced a steady and significant increase throughout the period, starting at 13.06% in 2021 and culminating in 21.04% in 2025. This indicates a growing ability to generate profit from shareholder investments.
- Return on Assets (ROA)
- Return on assets also showed consistent improvement, increasing from 6.30% in 2021 to 9.91% in 2025. This suggests enhanced efficiency in utilizing assets to generate earnings. The rate of increase slowed between 2024 and 2025, indicating a potential plateauing of asset utilization gains.
Overall, the observed trends suggest strengthening financial performance. The consistent increases in profitability ratios indicate effective management strategies and a positive trajectory for future earnings. The slight moderation in gross and net profit margins in the final year warrants continued monitoring.
Return on Sales
Return on Investment
Gross Profit Margin
Eaton Corp. plc, gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited an overall upward trend between 2021 and 2024, followed by a slight decrease in the most recent year presented. This indicates improving profitability from sales over the initial period, with a moderation of that improvement in 2025.
- Gross Profit Margin Trend
- The gross profit margin increased from 32.28% in 2021 to 33.19% in 2022, representing a modest initial gain. The rate of increase accelerated between 2022 and 2023, reaching 36.36%. Further improvement was observed in 2024, with the margin reaching 38.20%, its highest point in the observed period. However, in 2025, the gross profit margin decreased slightly to 37.59%.
Concurrently, both gross profit and net sales increased consistently throughout the period. Gross profit rose from US$6,335 million in 2021 to US$10,317 million in 2025. Net sales also demonstrated growth, increasing from US$19,628 million in 2021 to US$27,448 million in 2025. The consistent growth in both figures suggests a strong overall business performance.
- Relationship between Gross Profit and Net Sales
- The increasing gross profit margin, alongside rising net sales, suggests that the company is becoming more efficient at converting sales into gross profit. The slight decrease in the gross profit margin in 2025, despite continued growth in both gross profit and net sales, warrants further investigation to determine the underlying cause. Potential factors could include increased cost of goods sold, changes in product mix, or pricing pressures.
The observed trend suggests effective cost management and/or pricing strategies were in place between 2021 and 2024. The 2025 result indicates a potential shift in these dynamics, requiring further scrutiny to assess its sustainability.
Operating Profit Margin
Eaton Corp. plc, operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Operating Profit Margin, Sector | ||||||
| Capital Goods | ||||||
| Operating Profit Margin, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a generally positive trend over the five-year period. Initial observations reveal fluctuations followed by consistent improvement in later years. A detailed examination of the figures indicates a period of initial decline, followed by substantial gains.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 15.69%. A decrease was observed in 2022, with the margin declining to 14.55%. However, 2023 marked a turning point, as the margin increased to 16.75%. This upward trajectory continued into 2024, reaching 18.62%, and further improved to 18.98% in 2025.
The increase in operating profit margin from 2022 to 2025 suggests improved operational efficiency or pricing strategies. The consistent growth in both operating income and net sales appears to be contributing to this positive trend. The rate of increase in operating profit margin appears to be slowing between 2024 and 2025, although it remains positive.
- Relationship to Underlying Financial Items
- Operating income increased steadily from US$3,080 million in 2021 to US$5,209 million in 2025. Net sales also demonstrated consistent growth, rising from US$19,628 million in 2021 to US$27,448 million in 2025. The combined effect of rising operating income and net sales has resulted in the observed improvement in the operating profit margin.
The company demonstrated an ability to translate revenue growth into improved profitability, as evidenced by the increasing operating profit margin. Continued monitoring of these trends will be important to assess the sustainability of this performance.
Net Profit Margin
Eaton Corp. plc, net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Eaton ordinary shareholders | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Profit Margin, Sector | ||||||
| Capital Goods | ||||||
| Net Profit Margin, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Net profit margin = 100 × Net income attributable to Eaton ordinary shareholders ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited a generally positive trend between 2021 and 2025. Initial values indicate a margin of 10.92% in 2021, which increased consistently over the subsequent years, peaking at 15.25% in 2024 before experiencing a slight decrease in 2025.
- Net Profit Margin Trend
- From 2021 to 2024, the net profit margin demonstrated consistent growth. It rose from 10.92% to 11.86% in 2022, continued to 13.87% in 2023, and reached its highest point at 15.25% in 2024. This suggests improving profitability during this period, potentially driven by factors such as increased operational efficiency, favorable pricing strategies, or a shift in product mix towards higher-margin offerings.
- 2025 Performance
- In 2025, the net profit margin decreased slightly to 14.89%. While still representing a strong level of profitability, this represents a deceleration in the previously observed growth trend. This decrease occurred alongside continued growth in net sales, indicating that while the company is generating more revenue, the rate at which that revenue translates into profit has slowed.
- Relationship to Net Sales
- Net sales increased steadily throughout the period, from US$19,628 million in 2021 to US$27,448 million in 2025. The concurrent increase in net income attributable to ordinary shareholders, coupled with the rising net profit margin until 2024, suggests that sales growth was effectively leveraged to improve overall profitability. The slight margin contraction in 2025 warrants further investigation to determine if increased costs or other factors are impacting profitability despite continued sales expansion.
Overall, the period under review indicates a positive trajectory in profitability, with a notable peak in 2024. The slight decline in net profit margin in 2025, while not necessarily concerning in isolation, should be monitored in future periods to assess whether it represents a temporary fluctuation or the beginning of a more sustained trend.
Return on Equity (ROE)
Eaton Corp. plc, ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Eaton ordinary shareholders | ||||||
| Total Eaton shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| ROE, Sector | ||||||
| Capital Goods | ||||||
| ROE, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROE = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total Eaton shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Equity (ROE) demonstrates a consistent upward trajectory over the five-year period. Net income attributable to Eaton ordinary shareholders and total Eaton shareholders’ equity both increased throughout the period, contributing to this trend. The analysis below details the observed patterns.
- ROE Trend
- ROE increased from 13.06% in 2021 to 21.04% in 2025. This represents a substantial improvement in the company’s ability to generate profit from shareholder investments. The most significant increase occurred between 2022 and 2023, rising from 14.45% to 16.90%, and again between 2023 and 2024, increasing to 20.52%. Growth continued, albeit at a slower pace, reaching 21.04% in 2025.
- Net Income Impact
- Net income attributable to Eaton ordinary shareholders increased steadily from US$2,144 million in 2021 to US$4,087 million in 2025. This consistent growth in profitability is a primary driver of the observed ROE improvement. The largest year-over-year increase in net income occurred between 2022 and 2023, with an increase of US$756 million.
- Shareholders’ Equity Impact
- Total Eaton shareholders’ equity also exhibited growth, increasing from US$16,413 million in 2021 to US$19,425 million in 2025. However, the growth in shareholders’ equity was not consistently linear. A slight decrease was observed between 2023 (US$19,036 million) and 2024 (US$18,488 million) before resuming growth in 2025. Despite this temporary dip, the overall increase in equity contributed positively to the ROE, although to a lesser extent than the growth in net income.
The combined effect of increasing net income and growing shareholders’ equity resulted in a strengthening ROE. The rate of ROE increase suggests improving operational efficiency and/or effective capital allocation strategies.
Return on Assets (ROA)
Eaton Corp. plc, ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Eaton ordinary shareholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| ROA, Sector | ||||||
| Capital Goods | ||||||
| ROA, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROA = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a consistent upward trend over the five-year period. Net income attributable to Eaton ordinary shareholders increased steadily from US$2,144 million in 2021 to US$4,087 million in 2025. Simultaneously, total assets grew from US$34,027 million in 2021 to US$41,251 million in 2025, though the rate of asset growth appeared to moderate in 2024.
- ROA Trend
- The ROA increased from 6.30% in 2021 to 7.03% in 2022, representing an initial gain in asset utilization efficiency. This positive trend continued with ROA reaching 8.37% in 2023 and further improving to 9.89% in 2024. The rate of increase slowed slightly in 2025, with ROA reaching 9.91%. This suggests that while the company continued to generate higher returns from its assets, the incremental improvement diminished in the most recent year.
The consistent rise in ROA indicates that the company is becoming increasingly effective at converting its investments in assets into profits. The stabilization of the ROA in 2025, while still at a high level, warrants further investigation to determine if this represents a plateau in efficiency or a temporary pause in improvement.
- Net Income and Asset Relationship
- The growth in net income outpaced the growth in total assets over the period, contributing to the observed increase in ROA. While assets expanded, the company demonstrated an enhanced ability to generate earnings from those assets. The relatively stable asset base in 2024, coupled with continued net income growth, resulted in the largest single-year increase in ROA during the observed timeframe.
Overall, the ROA demonstrates a positive trajectory, suggesting improved profitability and efficient asset management. Continued monitoring of this ratio, alongside its underlying components, is recommended to assess the sustainability of this performance.