Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
Eaton Corp. plc, profitability ratios
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 Margin
- The gross profit margin shows a consistent upward trend over the five-year period. Starting at 30.52% in 2020, it steadily increased each year, reaching 38.2% in 2024. This indicates an improvement in the company's efficiency in managing production costs relative to revenue.
- Operating Profit Margin
- The operating profit margin generally improved from 11.45% in 2020 to 18.62% in 2024, despite a slight dip in 2022. The margin rose from 11.45% to 15.69% between 2020 and 2021, then experienced a marginal decrease to 14.55% in 2022 before recovering and continuing its upward trajectory through 2023 and 2024. This suggests more effective control of operating expenses, contributing to better operational profitability.
- Net Profit Margin
- The net profit margin displayed a steady increase throughout the period. From 7.9% in 2020, it rose progressively to 15.25% in 2024. The continuous growth in net margin reflects enhanced overall profitability, possibly driven by improved cost management, increased revenues, or tax efficiencies.
- Return on Equity (ROE)
- Return on equity exhibited a strong positive trend, rising from 9.44% in 2020 to 20.52% in 2024. This increase indicates that the company is generating higher returns for its shareholders on equity invested, with a particularly notable acceleration between 2023 and 2024.
- Return on Assets (ROA)
- The return on assets increased consistently from 4.43% in 2020 to 9.89% in 2024. The growth in ROA signifies improved efficiency in utilizing assets to generate earnings, reinforcing the overall trend of enhanced profitability and operational effectiveness.
Return on Sales
Return on Investment
Gross Profit Margin
Eaton Corp. plc, gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 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).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Gross Profit
- The gross profit shows a consistent upward trend over the five-year period. Starting from 5,450 million USD in 2020, it increases year over year, reaching 9,503 million USD in 2024. The growth appears to accelerate particularly after 2022, indicating improved operational efficiency or increased sales volume.
- Net Sales
- Net sales exhibit steady growth throughout the observed years, rising from 17,858 million USD in 2020 to 24,878 million USD in 2024. The increase is fairly consistent, with a slight acceleration after 2022, mirroring the trend in gross profit and suggesting expanding market reach or higher product demand.
- Gross Profit Margin
- The gross profit margin improves progressively, moving from 30.52% in 2020 to 38.2% in 2024. This rise signifies enhanced profitability at the gross profit level, which could be attributed to better pricing strategies, cost reductions in production, or a favorable sales mix. The margin growth is particularly notable between 2022 and 2024, aligning with the sharper increases in both gross profit and net sales.
Operating Profit Margin
Eaton Corp. plc, operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 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).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income
- Operating income has demonstrated a generally upward trend over the five-year period. Starting at 2,045 million US dollars in 2020, it saw a significant increase to 3,080 million in 2021. While there was a slight decrease to 3,019 million in 2022, the figure rebounded strongly in the following years, reaching 3,885 million in 2023 and peaking at 4,632 million in 2024. This indicates improving operational performance and increasing profitability from core business activities.
- Net Sales
- Net sales have shown consistent growth every year, rising from 17,858 million US dollars in 2020 to 24,878 million in 2024. This steady increase suggests expanding market demand or effective sales strategies contributing to top-line revenue growth. The incremental changes year over year reflect a stable upward trend in the company’s sales volume or pricing power.
- Operating Profit Margin
- The operating profit margin also reflects positive momentum, improving from 11.45% in 2020 to 18.62% in 2024. The margin increased notably in 2021 to 15.69%, dropped slightly to 14.55% in 2022, then progressively rose in the subsequent years reaching the highest level in 2024. This pattern suggests enhanced operational efficiency or cost management contributing to a higher proportion of operating income relative to net sales.
- Overall Summary
- Across the period analyzed, the company demonstrated solid growth in both revenue and operating income accompanied by an improving profit margin. The trends indicate strengthening operational profitability and effective revenue generation strategies. Despite minor fluctuations in certain years, the overall trajectory is positive, signaling robust financial health and increasing efficiency in core operations.
Net Profit Margin
Eaton Corp. plc, net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 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).
1 2024 Calculation
Net profit margin = 100 × Net income attributable to Eaton ordinary shareholders ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data indicates a consistent upward trend across key performance metrics over the five-year period ending December 31, 2024.
- Net income attributable to ordinary shareholders
- Net income increased substantially from US$1,410 million in 2020 to US$3,794 million in 2024. This represents a compound growth reflecting strong profitability improvements and effective cost management, suggesting enhanced operational efficiency or favorable market conditions during this period.
- Net sales
- Net sales showed steady growth year-over-year, rising from US$17,858 million in 2020 to US$24,878 million in 2024. This consistent increase in sales revenue highlights the company's successful efforts in expanding its market presence or improving sales volumes.
- Net profit margin
- The net profit margin exhibited a clear positive trend, increasing from 7.9% in 2020 to 15.25% in 2024. This improvement in margin percentage underscores the company’s ability to convert sales into actual profit more efficiently over time, indicating improvements in cost control, pricing strategies, or product mix.
Overall, the data reflects a strong financial performance with progressive growth in both revenue and profitability metrics, suggesting effective management strategies and positive business momentum throughout the observed periods.
Return on Equity (ROE)
Eaton Corp. plc, ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 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).
1 2024 Calculation
ROE = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total Eaton shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net income attributable to Eaton ordinary shareholders
- The net income demonstrates a consistent upward trend over the five-year period. Starting from $1,410 million in 2020, the company experienced incremental growth each year, reaching $3,794 million by 2024. This represents a significant increase in profitability, more than doubling over the span.
- Total Eaton shareholders’ equity
- Shareholders’ equity shows a general upward movement from $14,930 million in 2020 to a peak of $19,036 million in 2023. However, in 2024, there was a slight decline to $18,488 million. Despite this minor drop, the overall trend suggests growth in the company’s net asset base over the period.
- Return on Equity (ROE)
- Return on equity exhibits a strong and steady improvement, moving from 9.44% in 2020 to 20.52% in 2024. This increasing ROE indicates enhanced efficiency in generating profits from shareholders’ equity, implying improved management performance and potentially better capital utilization across the years.
Return on Assets (ROA)
Eaton Corp. plc, ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 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).
1 2024 Calculation
ROA = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income Attributable to Eaton Ordinary Shareholders
- The net income shows a consistent upward trend over the five-year period. It increased from 1,410 million US dollars in 2020 to 3,794 million US dollars in 2024, representing a significant growth. The year-over-year increases suggest strong profitability improvements, with the largest absolute growth occurring between 2022 and 2024.
- Total Assets
- Total assets also demonstrated a generally increasing trend from 31,824 million US dollars in 2020 to 38,381 million US dollars in 2024. While the asset base grew steadily from 2020 through 2023, the figures show a slight decline from 38,432 million US dollars in 2023 to 38,381 million US dollars in 2024. Overall, the growth in assets is moderate compared to the growth in net income.
- Return on Assets (ROA)
- The return on assets improved substantially, increasing from 4.43% in 2020 to 9.89% in 2024. This indicates that the company has become more efficient in generating profits from its asset base over the years. The ROA growth aligns with the increase in net income, suggesting enhanced operational performance and effective asset utilization.
- Summary of Financial Trends
- There is a clear pattern of improving profitability and efficiency. Net income nearly tripled over the period, outpacing total asset growth, which resulted in a doubling of the return on assets. The slight decline in total assets in the final year does not appear to have negatively impacted profitability, which continued to rise. These trends together indicate strengthening financial health and enhanced effectiveness in leveraging assets to generate earnings.