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Eaton Corporation plc ETN

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The bet you're really making is that the world keeps building electricity into everything, data centers, factories and power grids, and keeps buying Eaton's switches, breakers and power gear to move that electricity around safely. Underneath that, you're betting the AI data center boom in North America, where Eaton's biggest and best business grew 18% last quarter, runs for years, not months. Right now it looks better than the reported profit says: sales jumped 21% to the largest quarter ever, but reported profit fell 16% because Eaton borrowed heavily to buy another company and is now paying for it. You pay about 40 times last year's profit, more than the stock has cost at any point in the last twelve years.

Key data

Price$410.85
52-week range$311.92 – $478
P/E (trailing / FY2028E)41.8x / 22.0x
EV/EBITDA27.9x

ETN · price with moving averages

Daily · 6MWeekly · 3Y
$168$244$320$396$472 Sep '23Apr '24Nov '24Jul '25Feb '26Sep '26 BID
EMAs82140

Source: market data.

The business

Eaton sells the hardware that controls and protects electric power: circuit breakers, switchgear, transformers, uninterruptible power supplies, and the assemblies that wire a building or a data hall. It also makes aerospace and vehicle power systems, but the story is electrical, now close to two-thirds of sales. The buyer is a data center builder, a utility, a factory, or the electrical distributor who stocks Eaton's parts for them. The money is made two ways: large project orders that show up as backlog, and a long tail of replacement parts sold through distribution at high margin. The crown jewel is Electrical Americas, which sold $3.95B last quarter at a 27.5% operating margin. What Eaton owns that a new entrant cannot copy quickly is the installed base: once its gear sits in a data hall or a plant, the owner specs Eaton again for the next one, because reliability and service outweigh price. That is the moat, switching cost built on decades of installed equipment. The concrete thing: the grey steel switchgear cabinet humming next to every server row.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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