Eaton Slips On Q4 Revenue Miss, Eyes Growth In 2025

Eaton Corporation plc (NYSE: ETN), a global leader in intelligent power management, reported its fourth quarter 2024 results, with earnings per share (EPS) of $2.45, a 4% increase over the same period in 2023. Adjusted EPS reached a record $2.83, up 11% year-over-year. Despite these strong earnings, Eaton missed revenue expectations, reporting $6.2 billion in sales compared to the consensus of $6.34 billion. The company attributed this miss to Hurricane Helene and labor strikes in the aerospace industry, which negatively impacted sales by approximately $80 million, or 130 basis points. Additionally, negative currency translation partially offset the 6% organic sales growth.

Eaton's segment margins reached a quarterly record of 24.7%, surpassing the high end of its guidance range and representing a 190-basis point improvement over the fourth quarter of 2023. Operating cash flow and free cash flow both set new records, increasing by 23% and 27%, respectively, over the same period in 2023.

Craig Arnold, Eaton's chairman and chief executive officer, expressed confidence in the company's ability to maintain its momentum into 2025, stating, "Our strong performance in 2024 was a result of robust demand and our team's successful execution. We're confident in that continued momentum into 2025 as Eaton is in a unique position to deliver differentiated performance amid powerful megatrends driving higher growth in our markets."

For the full year 2025, Eaton projects organic growth of 7% to 9% and adjusted EPS between $11.80 and $12.20, up 11% at the midpoint over the prior year. The company anticipates earnings per share between $10.60 and $11.00, up 14% at the midpoint over 2024. For the first quarter of 2025, Eaton expects organic growth of 5.5% to 7.5% and adjusted EPS between $2.65 and $2.75.

Eaton's Electrical Americas segment reported record sales of $2.9 billion, up 9% from the fourth quarter of 2023, driven entirely by organic sales growth. Operating profits in this segment rose by 20%, with margins reaching a record 31.6%. The Aerospace segment also posted impressive results, with sales climbing to $971 million, a 9% increase, and operating profits rising by 11%. Despite facing challenges in the Vehicle and eMobility segments, Eaton's overall performance remained strong, supported by robust order performance and backlog growth in the Electrical and Aerospace segments.

In conclusion, Eaton's fourth quarter results demonstrated strong earnings growth and record segment margins, despite missing revenue expectations due to external factors. The company's guidance for 2025 reflects its confidence in maintaining momentum and capitalizing on growth opportunities in its markets. Investors should closely monitor Eaton's progress as it works to address the challenges in its Vehicle and eMobility segments while maintaining its strong performance in the Electrical and Aerospace segments.