Intrinsic value of Eaton - ETN

Previous Close

$77.34

  Intrinsic Value

$79.85

stock screener

  Rating & Target

hold

+3%

Previous close

$77.34

 
Intrinsic value

$79.85

 
Up/down potential

+3%

 
Rating

hold

We calculate the intrinsic value of ETN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 34.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
Revenue, $m
  21,077
  21,809
  22,599
  23,449
  24,360
  25,333
  26,371
  27,475
  28,648
  29,891
  31,209
  32,603
  34,076
  35,633
  37,276
  39,009
  40,837
  42,763
  44,792
  46,929
  49,178
  51,546
  54,037
  56,657
  59,413
  62,311
  65,358
  68,561
  71,929
  75,467
Variable operating expenses, $m
  15,029
  15,485
  15,978
  16,508
  17,076
  17,684
  18,331
  19,019
  19,751
  20,527
  19,465
  20,334
  21,253
  22,224
  23,249
  24,330
  25,470
  26,671
  27,937
  29,269
  30,672
  32,149
  33,703
  35,337
  37,056
  38,863
  40,764
  42,762
  44,862
  47,069
Fixed operating expenses, $m
  3,397
  3,472
  3,548
  3,626
  3,706
  3,788
  3,871
  3,956
  4,043
  4,132
  4,223
  4,316
  4,411
  4,508
  4,607
  4,708
  4,812
  4,918
  5,026
  5,137
  5,250
  5,365
  5,483
  5,604
  5,727
  5,853
  5,982
  6,113
  6,248
  6,385
Total operating expenses, $m
  18,426
  18,957
  19,526
  20,134
  20,782
  21,472
  22,202
  22,975
  23,794
  24,659
  23,688
  24,650
  25,664
  26,732
  27,856
  29,038
  30,282
  31,589
  32,963
  34,406
  35,922
  37,514
  39,186
  40,941
  42,783
  44,716
  46,746
  48,875
  51,110
  53,454
Operating income, $m
  2,651
  2,851
  3,072
  3,314
  3,577
  3,862
  4,169
  4,499
  4,854
  5,233
  7,521
  7,953
  8,412
  8,901
  9,420
  9,971
  10,555
  11,174
  11,829
  12,523
  13,256
  14,031
  14,851
  15,716
  16,630
  17,595
  18,612
  19,686
  20,819
  22,013
EBITDA, $m
  6,832
  7,112
  7,419
  7,753
  8,116
  8,507
  8,927
  9,378
  9,860
  10,374
  10,923
  11,506
  12,126
  12,785
  13,483
  14,223
  15,006
  15,835
  16,711
  17,638
  18,617
  19,650
  20,741
  21,892
  23,106
  24,387
  25,737
  27,159
  28,659
  30,239
Interest expense (income), $m
  0
  419
  446
  476
  508
  543
  580
  619
  662
  707
  754
  805
  859
  915
  975
  1,039
  1,105
  1,176
  1,250
  1,329
  1,411
  1,498
  1,590
  1,686
  1,788
  1,894
  2,006
  2,124
  2,248
  2,379
  2,516
Earnings before tax, $m
  2,232
  2,405
  2,596
  2,806
  3,034
  3,282
  3,550
  3,838
  4,147
  4,478
  6,716
  7,094
  7,497
  7,925
  8,381
  8,865
  9,379
  9,923
  10,500
  11,111
  11,758
  12,442
  13,165
  13,929
  14,736
  15,588
  16,488
  17,438
  18,440
  19,497
Tax expense, $m
  603
  649
  701
  758
  819
  886
  958
  1,036
  1,120
  1,209
  1,813
  1,915
  2,024
  2,140
  2,263
  2,394
  2,532
  2,679
  2,835
  3,000
  3,175
  3,359
  3,554
  3,761
  3,979
  4,209
  4,452
  4,708
  4,979
  5,264
Net income, $m
  1,630
  1,756
  1,895
  2,048
  2,215
  2,396
  2,591
  2,802
  3,027
  3,269
  4,903
  5,179
  5,473
  5,786
  6,118
  6,472
  6,847
  7,244
  7,665
  8,111
  8,583
  9,082
  9,610
  10,168
  10,757
  11,379
  12,036
  12,730
  13,461
  14,233

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  33,724
  34,894
  36,158
  37,518
  38,975
  40,533
  42,193
  43,960
  45,836
  47,826
  49,934
  52,164
  54,522
  57,013
  59,641
  62,415
  65,339
  68,421
  71,667
  75,086
  78,685
  82,473
  86,458
  90,651
  95,061
  99,698
  104,573
  109,698
  115,086
  120,748
Adjusted assets (=assets-cash), $m
  33,724
  34,894
  36,158
  37,518
  38,975
  40,533
  42,193
  43,960
  45,836
  47,826
  49,934
  52,164
  54,522
  57,013
  59,641
  62,415
  65,339
  68,421
  71,667
  75,086
  78,685
  82,473
  86,458
  90,651
  95,061
  99,698
  104,573
  109,698
  115,086
  120,748
Revenue / Adjusted assets
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
  0.625
Average production assets, $m
  22,974
  23,771
  24,633
  25,559
  26,552
  27,613
  28,744
  29,948
  31,226
  32,582
  34,018
  35,537
  37,143
  38,840
  40,631
  42,520
  44,512
  46,612
  48,823
  51,152
  53,604
  56,185
  58,900
  61,756
  64,760
  67,919
  71,240
  74,732
  78,402
  82,259
Working capital, $m
  464
  480
  497
  516
  536
  557
  580
  604
  630
  658
  687
  717
  750
  784
  820
  858
  898
  941
  985
  1,032
  1,082
  1,134
  1,189
  1,246
  1,307
  1,371
  1,438
  1,508
  1,582
  1,660
Total debt, $m
  8,265
  8,816
  9,411
  10,052
  10,738
  11,472
  12,254
  13,086
  13,970
  14,907
  15,900
  16,950
  18,061
  19,234
  20,472
  21,778
  23,156
  24,607
  26,136
  27,746
  29,442
  31,226
  33,103
  35,078
  37,155
  39,339
  41,635
  44,049
  46,586
  49,253
Total liabilities, $m
  15,884
  16,435
  17,030
  17,671
  18,357
  19,091
  19,873
  20,705
  21,589
  22,526
  23,519
  24,569
  25,680
  26,853
  28,091
  29,397
  30,775
  32,226
  33,755
  35,365
  37,061
  38,845
  40,722
  42,697
  44,774
  46,958
  49,254
  51,668
  54,205
  56,872
Total equity, $m
  17,840
  18,459
  19,128
  19,847
  20,618
  21,442
  22,320
  23,255
  24,247
  25,300
  26,415
  27,595
  28,842
  30,160
  31,550
  33,017
  34,564
  36,195
  37,912
  39,720
  41,624
  43,628
  45,736
  47,954
  50,287
  52,740
  55,319
  58,030
  60,880
  63,876
Total liabilities and equity, $m
  33,724
  34,894
  36,158
  37,518
  38,975
  40,533
  42,193
  43,960
  45,836
  47,826
  49,934
  52,164
  54,522
  57,013
  59,641
  62,414
  65,339
  68,421
  71,667
  75,085
  78,685
  82,473
  86,458
  90,651
  95,061
  99,698
  104,573
  109,698
  115,085
  120,748
Debt-to-equity ratio
  0.460
  0.480
  0.490
  0.510
  0.520
  0.540
  0.550
  0.560
  0.580
  0.590
  0.600
  0.610
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.690
  0.700
  0.710
  0.720
  0.720
  0.730
  0.740
  0.750
  0.750
  0.760
  0.770
  0.770
Adjusted equity ratio
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,630
  1,756
  1,895
  2,048
  2,215
  2,396
  2,591
  2,802
  3,027
  3,269
  4,903
  5,179
  5,473
  5,786
  6,118
  6,472
  6,847
  7,244
  7,665
  8,111
  8,583
  9,082
  9,610
  10,168
  10,757
  11,379
  12,036
  12,730
  13,461
  14,233
Depreciation, amort., depletion, $m
  4,181
  4,260
  4,347
  4,439
  4,538
  4,645
  4,758
  4,878
  5,006
  5,141
  3,402
  3,554
  3,714
  3,884
  4,063
  4,252
  4,451
  4,661
  4,882
  5,115
  5,360
  5,618
  5,890
  6,176
  6,476
  6,792
  7,124
  7,473
  7,840
  8,226
Funds from operations, $m
  5,810
  6,016
  6,242
  6,488
  6,754
  7,041
  7,349
  7,680
  8,033
  8,411
  8,304
  8,732
  9,187
  9,670
  10,181
  10,724
  11,298
  11,905
  12,548
  13,226
  13,944
  14,701
  15,500
  16,344
  17,233
  18,171
  19,160
  20,203
  21,302
  22,459
Change in working capital, $m
  15
  16
  17
  19
  20
  21
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  45
  47
  49
  52
  55
  58
  61
  64
  67
  70
  74
  78
Cash from operations, $m
  5,796
  6,000
  6,225
  6,469
  6,734
  7,019
  7,326
  7,655
  8,007
  8,383
  8,275
  8,702
  9,155
  9,635
  10,145
  10,686
  11,258
  11,863
  12,503
  13,179
  13,894
  14,649
  15,445
  16,286
  17,173
  18,108
  19,093
  20,132
  21,227
  22,381
Maintenance CAPEX, $m
  -2,225
  -2,297
  -2,377
  -2,463
  -2,556
  -2,655
  -2,761
  -2,874
  -2,995
  -3,123
  -3,258
  -3,402
  -3,554
  -3,714
  -3,884
  -4,063
  -4,252
  -4,451
  -4,661
  -4,882
  -5,115
  -5,360
  -5,618
  -5,890
  -6,176
  -6,476
  -6,792
  -7,124
  -7,473
  -7,840
New CAPEX, $m
  -728
  -797
  -861
  -926
  -993
  -1,061
  -1,131
  -1,203
  -1,278
  -1,356
  -1,436
  -1,519
  -1,606
  -1,697
  -1,791
  -1,889
  -1,992
  -2,099
  -2,212
  -2,329
  -2,452
  -2,580
  -2,715
  -2,856
  -3,004
  -3,159
  -3,321
  -3,492
  -3,670
  -3,857
Cash from investing activities, $m
  -2,953
  -3,094
  -3,238
  -3,389
  -3,549
  -3,716
  -3,892
  -4,077
  -4,273
  -4,479
  -4,694
  -4,921
  -5,160
  -5,411
  -5,675
  -5,952
  -6,244
  -6,550
  -6,873
  -7,211
  -7,567
  -7,940
  -8,333
  -8,746
  -9,180
  -9,635
  -10,113
  -10,616
  -11,143
  -11,697
Free cash flow, $m
  2,843
  2,905
  2,986
  3,079
  3,185
  3,303
  3,434
  3,577
  3,734
  3,905
  3,581
  3,780
  3,995
  4,224
  4,470
  4,733
  5,014
  5,312
  5,630
  5,968
  6,327
  6,708
  7,112
  7,540
  7,993
  8,473
  8,980
  9,517
  10,084
  10,684
Issuance/(repayment) of debt, $m
  514
  551
  595
  640
  686
  734
  782
  832
  884
  937
  993
  1,050
  1,111
  1,173
  1,238
  1,306
  1,377
  1,451
  1,529
  1,610
  1,695
  1,784
  1,877
  1,975
  2,077
  2,184
  2,296
  2,414
  2,537
  2,667
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  514
  551
  595
  640
  686
  734
  782
  832
  884
  937
  993
  1,050
  1,111
  1,173
  1,238
  1,306
  1,377
  1,451
  1,529
  1,610
  1,695
  1,784
  1,877
  1,975
  2,077
  2,184
  2,296
  2,414
  2,537
  2,667
Total cash flow (excl. dividends), $m
  3,357
  3,457
  3,582
  3,720
  3,871
  4,036
  4,216
  4,409
  4,618
  4,842
  4,574
  4,831
  5,105
  5,397
  5,709
  6,039
  6,391
  6,764
  7,159
  7,578
  8,022
  8,492
  8,989
  9,514
  10,070
  10,657
  11,276
  11,931
  12,622
  13,350
Retained Cash Flow (-), $m
  -587
  -619
  -669
  -719
  -771
  -824
  -878
  -935
  -993
  -1,053
  -1,115
  -1,180
  -1,247
  -1,317
  -1,391
  -1,467
  -1,547
  -1,630
  -1,717
  -1,809
  -1,904
  -2,004
  -2,108
  -2,218
  -2,333
  -2,453
  -2,579
  -2,711
  -2,850
  -2,995
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  2,770
  2,838
  2,913
  3,000
  3,100
  3,212
  3,337
  3,475
  3,626
  3,790
  3,459
  3,651
  3,858
  4,080
  4,318
  4,572
  4,844
  5,134
  5,442
  5,770
  6,118
  6,488
  6,881
  7,296
  7,737
  8,204
  8,697
  9,220
  9,772
  10,355
Discount rate, %
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
  2,643
  2,572
  2,495
  2,417
  2,335
  2,249
  2,157
  2,060
  1,957
  1,848
  1,511
  1,417
  1,317
  1,213
  1,106
  998
  890
  784
  682
  584
  494
  410
  335
  269
  212
  163
  123
  91
  66
  46
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Eaton Corporation plc operates as a power management company worldwide. Its Electrical Products segment offers electrical and industrial components, residential products, single phase power quality products, emergency lighting and fire detection products, wiring devices, structural support systems, and circuit protection and lighting products. The company’s Electrical Systems and Services segment provides power distribution and assemblies, three phase power quality products, hazardous duty electrical equipment, explosion-proof instrumentation, utility power distribution, power reliability equipment, and services. Its Hydraulics segment offers various power products, controls and sensing products, fluid conveyance products, filtration systems solutions, industrial drum and disc brakes, and golf grips. The company’s Aerospace segment provides hydraulic power generation systems, controls and sensing products, fluid conveyance products, and fuel systems for commercial and military use. Its Vehicle segment designs, manufactures, markets, and supplies drivetrain, powertrain systems, and critical components, including transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, cylinder heads, locking and limited slip differentials, transmission controls, fuel vapor components, fluid connectors, and conveyance products. The company serves industrial, institutional, governmental, utility, commercial, residential, information technology, renewable energy, marine, agriculture, oil and gas, construction, mining, forestry, material handling, truck and bus, machine tools, molding, primary metals, and power generation markets, as well as original equipment manufacturers and aftermarket customers of heavy, medium, and light-duty trucks, SUVs, CUVs, passenger cars, and agricultural equipment. Eaton Corporation plc was founded in 1916 and is based in Dublin, Ireland.

FINANCIAL RATIOS  of  Eaton (ETN)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

ETN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ETN stock intrinsic value calculation we used $20404 million for the last fiscal year's total revenue generated by Eaton. The default revenue input number comes from 2017 income statement of Eaton. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ETN stock valuation model: a) initial revenue growth rate of 3.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.8%, whose default value for ETN is calculated based on our internal credit rating of Eaton, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Eaton.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ETN stock the variable cost ratio is equal to 71.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3324 million in the base year in the intrinsic value calculation for ETN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Eaton.

Corporate tax rate of 27% is the nominal tax rate for Eaton. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ETN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ETN are equal to 109%.

Life of production assets of 10 years is the average useful life of capital assets used in Eaton operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ETN is equal to 2.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $17253 million for Eaton - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 445 million for Eaton is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Eaton at the current share price and the inputted number of shares is $34.4 billion.

COMPANY NEWS

▶ 2 Embarrassingly Low-Yield Dividend Stocks   [Jul-19-18 08:17AM  Motley Fool]
▶ Should You Bite on Eaton Corporation PLCs Yield?   [Jun-27-18 11:41PM  InvestorPlace]
▶ After-hours buzz: HOG, EFX & more   [Jun-25-18 06:10PM  CNBC]
▶ When Should You Buy Eaton Corporation plc (NYSE:ETN)?   [Jun-12-18 05:24PM  Simply Wall St.]
▶ 2 Dividend Stocks Better Than General Electric Company   [May-22-18 03:10PM  Motley Fool]
▶ 3 Weak Stocks Begging for Bear Trades   [May-14-18 10:47AM  InvestorPlace]
▶ 8 Ways to Play a Rising Market With Options   [May-11-18 07:38PM  Barrons.com]
▶ Eaton Named Among Americas Best Employers by Forbes   [May-08-18 08:30AM  Business Wire]
▶ Eaton: 1Q Earnings Snapshot   [06:41AM  Associated Press]
▶ Eaton Declares Quarterly Dividend Payable May 18, 2018   [Apr-24-18 10:00AM  Business Wire]
▶ PACCAR And Other Top Dividend Stocks   [08:02AM  Simply Wall St.]
▶ 5 Things Eaton Corp. Management Wants You to Know   [Mar-07-18 08:03AM  Motley Fool]
▶ United Technologies Among The Stocks Most At Risk From Trump Tariffs   [Mar-05-18 04:12PM  Investor's Business Daily]
▶ Eaton Increases Dividend by 10 Percent   [09:25AM  Business Wire]
▶ The search for value plays   [Feb-20-18 04:27PM  CNBC Videos]
▶ The search for value plays   [02:06PM  CNBC Videos]
▶ Robert Olstein's Top 5 New Buys   [Feb-09-18 11:52AM  GuruFocus.com]
▶ Eaton tops Street 4Q forecasts   [06:55AM  Associated Press]
▶ ETFs with exposure to Eaton Corp. Plc : December 29, 2017   [Dec-29-17 11:56AM  Capital Cube]
▶ 2 Stocks I'll Hold Forever   [Dec-20-17 08:15AM  Motley Fool]
▶ ETFs with exposure to Eaton Corp. Plc : December 18, 2017   [Dec-18-17 03:27PM  Capital Cube]
▶ ETFs with exposure to Eaton Corp. Plc : December 7, 2017   [Dec-07-17 01:40PM  Capital Cube]
▶ November Top Dividend Paying Stocks   [Nov-28-17 08:02AM  Simply Wall St.]
▶ ETFs with exposure to Eaton Corp. Plc : November 27, 2017   [Nov-27-17 01:26PM  Capital Cube]
▶ ETFs with exposure to Eaton Corp. Plc : November 17, 2017   [Nov-17-17 11:49AM  Capital Cube]
▶ Sun Hydraulics Is Stepping Up Its Game   [Nov-14-17 03:35PM  Motley Fool]
▶ Top Rated NYSE Industrial Dividend Stocks   [Nov-04-17 12:02PM  Simply Wall St.]
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