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Eaton Financial Strength

: 6 (As of Jun. 2022)
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Eaton has the Financial Strength Rank of 6.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Eaton's Interest Coverage for the quarter that ended in Jun. 2022 was 22.94. Eaton's debt to revenue ratio for the quarter that ended in Jun. 2022 was 0.48. As of today, Eaton's Altman Z-Score is 3.06.


Competitive Comparison

For the Specialty Industrial Machinery subindustry, Eaton's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Eaton Financial Strength Distribution

For the Industrial Products industry and Industrials sector, Eaton's Financial Strength distribution charts can be found below:

* The bar in red indicates where Eaton's Financial Strength falls into.



Eaton Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

Eaton's Interest Expense for the months ended in Jun. 2022 was $-31 Mil. Its Operating Income for the months ended in Jun. 2022 was $711 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2022 was $6,663 Mil.

Eaton's Interest Coverage for the quarter that ended in Jun. 2022 is

Interest Coverage=-1*Operating Income (Q: Jun. 2022 )/Interest Expense (Q: Jun. 2022 )
=-1*711/-31
=22.94

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

Eaton's Debt to Revenue Ratio for the quarter that ended in Jun. 2022 is

Debt to Revenue Ratio=Total Debt (Q: Jun. 2022 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(3422 + 6663) / 20848
=0.48

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Eaton has a Z-score of 3.06, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 3.06 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Eaton  (NYSE:ETN) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Eaton has the Financial Strength Rank of 6.


Eaton Financial Strength Related Terms

Thank you for viewing the detailed overview of Eaton's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.


Eaton Business Description

Eaton logo
Address
30 Pembroke Road, Eaton House, Dublin 4, IRL, D04 Y0C2
Eaton is a diversified power management company operating for over 100 years. The company operates through various segments, including electrical products, electrical systems and services, aerospace, vehicle, and most recently eMobility. Eaton's portfolio can broadly be divided into two halves. One part of its portfolio is housed under its industrial sector umbrella, which serves a large variety of end markets like commercial vehicles, general aviation, and trucks. The other portion is Eaton's electrical sector portfolio, which serves data centers, utilities, and the residential end market, among others. While the company receives favorable tax treatment as a domiciliary of Ireland, most of its operations take place in the U.S.
Executives
Thompson Dorothy C director 1000 EATON BLVD. CLEVELAND OH 44122
Page Gregory R director EATON CENTER 1111 SUPERIOR AVENUE CLEVELAND OH 44114
Mccoy Deborah L director CONTINENTAL AIRLINES INC. 1600 SMITH ST. HQS FL HOUSTON TX 77002
Smith Gerald B director
Connor Christopher M director THE SHERWIN WILLIAMS CO 101 W. PROSPECT AVENUE CLEVELAND OH 44115-1027
Hopgood Daniel Roy officer: See Remarks below. 2135 WEST MAPLE ROAD TROY MI 48084-7186
Monesmith Heath B. officer: See Remarks below. 600 TRAVIS, SUITE 5600 HOUSTON TX 77002
Marshall Ernest W Jr officer: See Remarks below. 1000 EATON BLVD CLEVELAND OH 44122
Pianalto Sandra director 1000 EATON BOULEVARD CLEVELAND OH 44122
Miller Boise April officer: See Remarks below. C/O MERITOR, INC. 2135 WEST MAPLE ROAD TROY MI 48084-7186
Okray Thomas B officer: See Remarks below. 5008 AIRPORT ROAD NW ROANOKE VA 24012
Brickhouse Brian S officer: See Remarks below. 1000 EATON BLVD. CLEVELAND OH 44122
Cheruvatath Nandakumar officer: See Remarks below 1000EATON BLVD. CLEVELAND OH 44122
Faria Joao V officer: See Remarks below. 1000 EATON BLVD. CLEVELAND OH 44122
Yadav Uday officer: See Remarks below. EATON CENTER 1111 SUPERIOR AVE. CLEVELAND OH 44114

Eaton Headlines

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