A Member of Pat McKeough’s Inner Circle recently asked for his advice on a leading global intelligent power management company that provides energy-efficient solutions to help customers effectively manage electrical, hydraulic, and mechanical power.
Pat likes the back-log momentum as the company keeps winning new business. This provides it with multi-year revenue visibility. Pat also notes that the shares are trading at 30.6 times forward earnings—but that the planned spinoff should unlock shareholder value.
EATON CORP. PLC (New York symbol ETN; www.eaton.com) is a power management company. Eaton serves many markets: datacentre, utility, industrial, commercial, machine building, residential, aerospace and mobility markets.
Founded in 1911, the company expanded worldwide and now has customers in more than 160 countries. Eaton operates through five segments: Electrical Americas (about 49% of revenue), Electrical Global (25%), Aerospace (15%), Vehicle (9%), and eMobility (2%).
In January 2026, completed the purchase of U.K.-based Ultra PCS Ltd. for $1.55 billion. That company makes electronic controls and sensors for aerospace customers.
In March 2026, Eaton completed the acquisition of Boyd Thermal, a firm specializing in thermal-management products for controlling excess heat in datacentres and other applications. Eaton bought Boyd Thermal from Boyd Corp., a business owned by Goldman Sachs Asset Management. The company paid $9.5 billion.
Meanwhile, the company has announced that it intends to spin off its Vehicle and eMobility segments into an independent, publicly traded company. It will then hand out shares in the new entity to its investors. Eaton will then be focused on its core Electrical and Aerospace businesses.
The Mobility segment provides engineered systems that create, distribute and optimize power for all types of vehicles. The unit also holds a leading market position across North and South America in commercial truck transmissions and clutches. In addition, its high-voltage EV fuses and valve actuation technologies are top sellers globally.
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Eaton’s big acquisitions will pay off
In the three months ended March 31, 2026, Eaton’s revenue rose 16.8%, to a record $7.45 billion from $6.38 billion. Revenue rose due to 10% growth in organic sales, 4% growth from acquisitions and 3% growth from foreign exchange.
Excluding one-time items, Eaton earned $1.09 billion, or $2.81 a share, up 2.2% from $1.07 billion, or $2.72. The increase was due to higher sales and robust demand in core segments.
Boyd Thermal should be a good fit for Eaton. It expects that firm’s 2026 sales to be $1.7 billion, with most coming from the sale of liquid-cooling technology to datacentres. In fact, datacentre revenue is now the largest component of overall sales.
The outlook for Eaton is positive. The company continues to see strong demand across its markets—with the most significant trend being electrification. As automation is increasingly deployed in factories and as electric vehicles (EVs) gain market share, demand for Eaton’s electrical switches and distribution products should continue to rise.
Energy transition is another key trend as fossil-fuel-powered appliances and tools are replaced with electric products. At the same time, demand for electric infrastructure equipment from utilities is rising rapidly around the globe. Digitization is another major trend driving growth. Large datacentre projects are being constructed, partly driven by the expansion of artificial intelligence (AI).
Meanwhile, the stock trades at a high 30.6 times the 2026 forecast earnings of $13.34 a share. The stock yields 1.1%.
Recommendation in Pat’s Inner Circle: Eaton Corp. Plc is a spinoff buy.
