ETN Pulls Back to Support. Smart Time to Enter?

August 21st, 2025 by Trefis Team
ETN: Eaton logo
ETN
Eaton

Eaton (ETN) should be on your watchlist. Here is why – it is currently trading in the support zone ($328.11 – $362.65), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 2 times and subsequently went on to generate 14.3% in average peak returns.

  Peak Return Days to Peak Return
10/10/2024 12.4% 55
6/16/2025 16.2% 42

But is the price action enough alone? It certainly helps if the fundamentals check out. For ETN Read Buy or Sell ETN Stock to see how convincing this buy opportunity might be.

Here are some quick data points:

  • Revenue Growth: 7.7% LTM and 9.5% last 3 year average.
  • Cash Generation: Nearly 12.6% free cash flow margin and 18.8% operating margin LTM.
  • Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for ETN was 7.0%.
  • Valuation: ETN trades at a PE multiple of 34.3
  • Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and lower margins

Eaton provides power management solutions worldwide, including electrical and industrial components, aerospace hydraulic systems, and vehicle transmissions, hybrid power systems, and engine valve technologies.

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  ETN S&P Median
Sector Industrials –
Industry Electrical Components & Equipment –
PE Ratio 34.3 23.7
   
LTM* Revenue Growth 7.7% 5.1%
3Y Average Annual Revenue Growth 9.5% 5.2%
Min Annual Revenue Growth Last 3Y 7.0% -0.3%
   
LTM* Operating Margin 18.8% 18.7%
3Y Average Operating Margin 17.4% 17.8%
LTM* Free Cash Flow Margin 12.6% 13.0%

*LTM: Last Twelve Months

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

What Is Stock-Specific Risk If The Market Crashes?

That said, this ETN isn’t immune to big sell-offs. It fell just over 40% in the Dot-Com Bubble and nearly 70% during the Global Financial Crisis. The Covid crash knocked it down about 45%, while the 2018 correction and recent inflation shock each triggered drops around 25-27%. Even with solid fundamentals, sharp market moves can still hit hard.

But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read ETN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.