Stock Analysis on Net

Eaton Corp. plc (NYSE:ETN)

Enterprise Value to EBITDA (EV/EBITDA) 

Microsoft Excel

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

Eaton Corp. plc, EBITDA calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to Eaton ordinary shareholders 3,794 3,218 2,462 2,144 1,410
Add: Net income attributable to noncontrolling interest 4 5 4 2 5
Add: Income tax expense 768 604 445 750 331
Earnings before tax (EBT) 4,566 3,827 2,911 2,896 1,746
Add: Interest expense, net 130 151 144 144 149
Earnings before interest and tax (EBIT) 4,696 3,978 3,055 3,040 1,895
Add: Depreciation and amortization 921 926 954 922 811
Earnings before interest, tax, depreciation and amortization (EBITDA) 5,617 4,904 4,009 3,962 2,706

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).


The financial data indicates a consistent upward trend across all key profitability metrics from 2020 through 2024. Each year demonstrates growth, reflecting improving operational efficiency and profitability.

Net income attributable to Eaton ordinary shareholders
There is a strong and steady increase from $1,410 million in 2020 to $3,794 million in 2024. This more than doubling of net income over five years indicates robust bottom-line growth, suggesting effective cost management and/or revenue growth driving higher profits available to shareholders.
Earnings before tax (EBT)
EBT shows a similar pattern, rising from $1,746 million in 2020 to $4,566 million in 2024. The year-over-year increments are substantial, implying increasing profitability before tax obligations. The consistency between EBT and net income growth underscores stable tax rates or effective tax planning.
Earnings before interest and tax (EBIT)
EBIT increases steadily from $1,895 million in 2020 to $4,696 million in 2024. The EBIT growth aligns closely with EBT progression, highlighting enhanced operational earnings and suggesting that financing costs have a relatively stable or modest impact on earnings.
Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA shows a pronounced upward trend from $2,706 million in 2020 to $5,617 million in 2024. This metric, serving as a proxy for operational cash flow, points to improved core business profitability and effective cost control on non-cash charges such as depreciation and amortization.

Overall, the trends across these four financial measures reveal a consistent and substantial improvement in profitability and operational efficiency. The progression suggests effective management strategies in place to drive earnings growth at multiple levels, resulting in enhanced shareholder value over the assessed period.


Enterprise Value to EBITDA Ratio, Current

Eaton Corp. plc, current EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel
Selected Financial Data (US$ in millions)
Enterprise value (EV) 159,726
Earnings before interest, tax, depreciation and amortization (EBITDA) 5,617
Valuation Ratio
EV/EBITDA 28.44
Benchmarks
EV/EBITDA, Competitors1
Boeing Co.
Caterpillar Inc. 14.56
GE Aerospace 29.78
Honeywell International Inc. 16.81
Lockheed Martin Corp. 13.14
RTX Corp. 19.78
EV/EBITDA, Sector
Capital Goods 25.72
EV/EBITDA, Industry
Industrials 18.88

Based on: 10-K (reporting date: 2024-12-31).

1 Click competitor name to see calculations.

If the company EV/EBITDA is lower then the EV/EBITDA of benchmark then company is relatively undervalued.
Otherwise, if the company EV/EBITDA is higher then the EV/EBITDA of benchmark then company is relatively overvalued.


Enterprise Value to EBITDA Ratio, Historical

Eaton Corp. plc, historical EV/EBITDA calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Enterprise value (EV)1 120,944 122,149 76,903 67,594 59,819
Earnings before interest, tax, depreciation and amortization (EBITDA)2 5,617 4,904 4,009 3,962 2,706
Valuation Ratio
EV/EBITDA3 21.53 24.91 19.18 17.06 22.11
Benchmarks
EV/EBITDA, Competitors4
Boeing Co. 71.32
Caterpillar Inc. 12.46 12.16 13.86 12.43 19.87
GE Aerospace 22.88 11.06 14.82 95.57 9.35
Honeywell International Inc. 15.87 15.55 18.01 15.57 20.21
Lockheed Martin Corp. 14.23 11.71 14.98 11.97 9.97
RTX Corp. 16.80 16.62 14.92 15.48 41.71
EV/EBITDA, Sector
Capital Goods 21.78 16.03 19.01 19.87 25.02
EV/EBITDA, Industry
Industrials 17.18 14.82 16.44 16.30 30.80

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 See details »

2 See details »

3 2024 Calculation
EV/EBITDA = EV ÷ EBITDA
= 120,944 ÷ 5,617 = 21.53

4 Click competitor name to see calculations.


The financial data reveals several notable trends over the five-year period ending December 31, 2024. Enterprise value (EV) experienced consistent growth from 59,819 million US dollars in 2020 to a peak of 122,149 million US dollars in 2023, followed by a slight decrease to 120,944 million US dollars in 2024.

Earnings before interest, tax, depreciation, and amortization (EBITDA) demonstrated a steady upward trajectory, increasing from 2,706 million US dollars in 2020 to 5,617 million US dollars in 2024. This represents more than a doubling in EBITDA over the period, indicating improved operating profitability.

The EV/EBITDA ratio fluctuated during this timeframe. Starting at 22.11 in 2020, it decreased to 17.06 in 2021, suggesting a more favorable valuation relative to earnings in that year. The ratio then increased to 19.18 in 2022, rose sharply to 24.91 in 2023, and decreased to 21.53 in 2024. These variations indicate changing market perceptions of valuation relative to earnings, with the peak ratio in 2023 potentially reflecting higher market expectations or valuation pressures.

Enterprise Value (EV):
Consistent growth with a notable jump in 2023 and a slight decline in 2024.
EBITDA:
Steady increase across all years, indicating enhanced profitability and operational performance.
EV/EBITDA Ratio:
Initial decline followed by volatile increases, peaking in 2023, and decreasing in 2024, suggesting fluctuating valuation multiples relative to earnings.

Overall, the data suggests an improving operational performance supported by rising EBITDA, while enterprise value growth indicates increasing market capitalization over the period. The volatility in the EV/EBITDA ratio reflects changing market valuation sentiments, with a particularly high valuation multiple observed in 2023 before moderating somewhat in 2024.