Eaton's 2024 Earnings: A Mixed Bag of Records and Misses

As the calendar turned to 2025, Eaton Corporation plc (NYSE:ETN) reported its fourth quarter and full year 2024 earnings, offering investors a mixed bag of records and misses. The intelligent power management company delivered strong earnings growth and record segment margins, but missed revenue expectations due to external factors. Let's dive into the details and explore what this means for Eaton's future.



Fourth Quarter Earnings: A Tale of Two Halves

Eaton's fourth quarter earnings per share (EPS) of $2.45 marked a 4% increase over the same period in 2023, while adjusted EPS of $2.83 reached a record high, up 11% year-over-year. However, the company missed revenue expectations, reporting $6.2 billion in sales compared to the consensus of $6.34 billion. This miss was primarily due to Hurricane Helene and labor strikes in the aerospace industry, which negatively impacted sales by approximately $80 million, or 130 basis points.

Segment margins reached a quarterly record of 24.7%, above the high end of the latest guidance range and a 190-basis point improvement over the fourth quarter of 2023. Operating cash flow and free cash flow both set new records, up 23% and 27%, respectively, over the same period in 2023.

Craig Arnold, Eaton chairman and chief executive officer, expressed confidence in the company's continued momentum, stating, "Once again, we delivered on our commitments in the quarter, reporting record segment margins and strong earnings per share. We continue to see positive market activity with orders at high levels and ongoing backlog strength."

Full Year 2024: A Year of Records and Growth

For the full year 2024, sales were a record $24.9 billion, up 7% from 2023. Organic sales were up 8%, partially offset by 1% from negative currency translation. Segment margins of 24.0% for 2024 were a record and above the high end of the latest guidance range, representing a 200-basis point improvement over the full year 2023.

Earnings per share for 2024 were a record $9.50, with adjusted EPS of $10.80, up 18% over 2023. Operating cash flow for 2024 was $4.3 billion, and free cash flow was $3.5 billion, both records and up 19% and 23%, respectively, over the same period in 2023.

Guidance for 2025: Cautious Optimism

For the full year 2025, Eaton projects organic growth of 7-9% and segment margins of 24.4-24.8%. The company expects earnings per share between $10.60 and $11.00, up 14% at the midpoint over the prior year, and adjusted EPS between $11.80 and $12.20, up 11% at the midpoint over the prior year.

For the first quarter of 2025, Eaton anticipates organic growth of 5.5-7.5%, segment margins of 23.7-24.1%, earnings per share between $2.30 and $2.40, and adjusted EPS between $2.65 and $2.75.



The Road Ahead: Navigating External Challenges

Eaton's strong performance in 2024 was a result of robust demand and successful execution by the company's team. However, the impact of Hurricane Helene and labor strikes in the aerospace industry serves as a reminder that external factors can influence the company's sales and earnings. As Eaton looks to maintain its momentum in 2025, investors should monitor the company's progress and assess the potential impact of external factors on its future earnings.

In conclusion, Eaton's 2024 earnings results were a mixed bag of records and misses, with strong earnings growth and record segment margins offset by a revenue miss due to external factors. The company's guidance for 2025 reflects its confidence in maintaining momentum and delivering differentiated performance amid powerful megatrends driving higher growth in its markets. As investors consider Eaton's prospects, they should remain vigilant for potential external challenges and monitor the company's progress closely.