Eaton Corporation plc (ETN)

The base case represents the modal expected compounding path, yielding a synthesized fair value midpoint of USD 264.77. Eaton delivers strong operational performance, expanding revenue by 16.3% in FY2026 and 11.9% in FY2027, with Electrical Americas benefiting from AI power infrastructure demand. Second-half margins expand as negative price/cost reverses. However, discounting explicit five-year cash flows at a 9.10% WACC and applying a normalized terminal multiple of 21.0x establishes that current trading levels ($439.98) represent a 66.17% premium to fair value.

• Consolidated revenue expands from $31.91B in FY2026 to $44.05B in FY2030, driven by Electrical Americas and Electrical Global guidance
• Operating margin expands from 20.19% in FY2026 to 22.49% by FY2030
• EPS reaches consensus estimates of $13.55 in FY2026 and $16.13 in FY2027
• Operating tax rate normalized at 16.61% to 17.00%
• Net reinvestment rate scales from 24.0% in FY2026 to 20.0% in FY2030, supporting a 3.0% terminal growth rate
• Cash flows discounted at 9.10% WACC with a normalized terminal P/E of 21.0x