Comparing Emerson Electric (NYSE:EMR) & Eaton (NYSE:ETN)

Emerson Electric (NYSE:EMRGet Free Report) and Eaton (NYSE:ETNGet Free Report) are both large-cap industrials companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, valuation, profitability, analyst recommendations, earnings and dividends.

Insider & Institutional Ownership

74.3% of Emerson Electric shares are held by institutional investors. Comparatively, 83.0% of Eaton shares are held by institutional investors. 0.5% of Emerson Electric shares are held by insiders. Comparatively, 0.3% of Eaton shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Emerson Electric and Eaton, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emerson Electric 2 4 11 1 2.61
Eaton 0 5 14 0 2.74

Emerson Electric currently has a consensus target price of $136.47, indicating a potential upside of 6.37%. Eaton has a consensus target price of $368.78, indicating a potential upside of 11.30%. Given Eaton’s stronger consensus rating and higher probable upside, analysts clearly believe Eaton is more favorable than Emerson Electric.

Earnings & Valuation

This table compares Emerson Electric and Eaton”s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Emerson Electric $17.49 billion 4.13 $1.97 billion $4.18 30.69
Eaton $24.88 billion 5.21 $3.79 billion $9.91 33.43

Eaton has higher revenue and earnings than Emerson Electric. Emerson Electric is trading at a lower price-to-earnings ratio than Eaton, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Emerson Electric has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500. Comparatively, Eaton has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.

Profitability

This table compares Emerson Electric and Eaton’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emerson Electric 13.60% 13.22% 7.57%
Eaton 15.55% 23.41% 11.31%

Dividends

Emerson Electric pays an annual dividend of $2.11 per share and has a dividend yield of 1.6%. Eaton pays an annual dividend of $4.16 per share and has a dividend yield of 1.3%. Emerson Electric pays out 50.5% of its earnings in the form of a dividend. Eaton pays out 42.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Emerson Electric has raised its dividend for 68 consecutive years. Emerson Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Eaton beats Emerson Electric on 13 of the 18 factors compared between the two stocks.

About Emerson Electric

(Get Free Report)

Emerson Electric Co., a technology and software company, provides various solutions for customers in industrial, commercial, and consumer markets in the Americas, Asia, the Middle East, Africa, and Europe. It operates in six segments: Final Control, Control Systems & Software, Measurement & Analytical, AspenTech, Discrete Automation, and Safety & Productivity. The Final Control segment provides control, isolation, shutoff, pressure relief, and pressure safety valves, actuators, and regulators for process and hybrid industries. The Measurement & Analytical segment offers intelligent instrumentation measuring the physical properties of liquids or gases, such as pressure, temperature, level, flow, acoustics, corrosion, pH, conductivity, water quality, toxic gases, and flame. The Discrete Automation segment offers solenoid and pneumatic valves, valve position indicators, pneumatic cylinders, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems, electrical distribution equipment, and materials joining solutions. The Safety & Productivity segment offers tools for professionals and homeowners; pipe-working tools, including pipe wrenches, pipe cutters, pipe threading and roll grooving equipment, battery hydraulic tools; electrical tools; and other professional tools. The Control Systems & Software segment provides distributed control systems, safety instrumented systems, SCADA systems, application software, digital twins, asset performance management, and cybersecurity. The Test & Measurement provides software-connected automated test and measurement systems. The AspenTech segment provides asset optimization software that enables industrial manufacturers to design, operate, and maintain operations for enhancing performance through a combination of decades of modeling, simulation, and optimization capabilities. The company was incorporated in 1890 and is headquartered in Saint Louis, Missouri.

About Eaton

(Get Free Report)

Eaton Corporation plc operates as a power management company worldwide. The company’s Electrical Americas and Electrical Global segment provides electrical components, industrial components, power distribution and assemblies, residential products, single and three phase power quality and connectivity products, wiring devices, circuit protection products, utility power distribution products, power reliability equipment, and services, as well as hazardous duty electrical equipment, emergency lighting, fire detection, explosion-proof instrumentation, and structural support systems. Its Aerospace segment offers pumps, motors, hydraulic power units, hoses and fittings, and electro-hydraulic pumps; valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems, and nose wheel steering systems; hose, thermoplastic tubing products, fittings, adapters, couplings, and sealing and ducting products; air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, and adapters and regulators; oxygen generation system, payload carriages, and thermal management products; and wiring connectors and cables, as well as hydraulic and bag filters, strainers and cartridges, and golf grips for manufacturers of commercial and military aircraft, and related after-market customers, as well as industrial applications. The company’s Vehicle segment offers transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, locking and limited slip differentials, transmission controls, and fuel vapor components for the vehicle industry. Its eMobility segment provides voltage inverters, converters, fuses, circuit protection units, vehicle controls, power distribution systems, fuel tank isolation valves, and commercial vehicle hybrid systems. Eaton Corporation plc was founded in 1911 and is based in Dublin, Ireland.

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