Overview
Since the Report + 0.9%
Revenue grew 28.0% year over year, EPS beat the estimate by 4.0%; the stock rose 6.1% in its first reaction.
- RevenueQ3
- $8.95B
- Estimate $8.48B · Beat by 5.5%
- EPSAdjusted
- $3.68
- Estimate $3.54 · Beat by 4.0%
Verdict
BUYEaton beat the high end of its own guidance on organic growth, segment margin and adjusted EPS in the third quarter; revenue rose 28% to $8.95B. Shares rose 6.1% intraday on record orders and a 46% jump in Electrical backlog. The next thing to watch is organic growth, guided to slow to 13-15% in the fourth quarter, and the interest burden from acquisition debt.
Close on Report DayNov 3
$388.44▲ 6.1%Report-Day Move
- Market Cap(Today)
- ≈ $152 B
- 1Y Return(At Report)
- + 1%
- P/E(At Today's Price · $12.97 · Trailing 12M)
- 30.2
- PEG(Company Guidance 2026)
- 2.17
- Net Margin(Trailing 12M)
- 12.8%
Earnings Summary
In 30 Seconds- Revenue of $8.95B beat the estimate by 5.5%, and adjusted EPS of $3.68 beat it by 4.0%.
- Full-year organic growth guidance rose to 13-15%, but fourth-quarter growth is expected to slow from 19% to 13-15%.
- Shares rose 6.1% intraday as the market focused on record orders and a 46% rise in Electrical backlog.
The Numbers
Organic Growth
19%
Guidance Was 13.5 – 15.5%
Segment Margin
25.3%
Record · +0.3 Points Year Over Year
Electrical Backlog
▲ 46% Year Over Year
Aerospace ▲ 33% · Book-to-Bill 1.2
Stock Reaction
▲ 6.1%
Intraday, 12:38 ET; Update This Evening
Quarterly Revenue ($ Billion)
6.99
Q3 25 · $6.99 B
7.06
Q4 25 · $7.06 B · QoQ + 1.0%
7.45
Q1 26 · $7.45 B · QoQ + 5.6%
8.53
Q2 26 · $8.53 B · QoQ + 14.5%
8.95
Q3 26 · $8.95 B · QoQ + 4.9% · YoY + 28.0%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
Q4 2026 Company Guidance
- Full-Year Adjusted EPS13.7 – 13.8 $13.7 $13.8 $13.7 – 13.8 $
Midpoint 13.75 · Prior 13.40–13.60 · Market Expectation 13.591.2% Above Estimate ▲
- Q4 Adjusted EPS4.05 – 4.15 $4.05 $4.15 $
Midpoint 4.10 · Market Expectation 4.10In Line ✓
- Full-Year Organic Growth13% – 15%13%15%
Prior Guidance 11–13%Raised 2.0 Points ▲
- Q4 Organic Growth13% – 15%13%15%
Q3 Actual 19%5.0-Point Slowdown ▼
- Q4 Segment Margin25.4% – 25.8%25.4%25.8%25.4% – 25.8%
Q3 25.3% · 24.9% a Year Ago0.3-Point Expansion ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±8.2% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Electrical Americas$4.17 BShare 46.6%▲ 22.3% YoY
- Electrical Global$2.73 BShare 30.5%▲ 58.2% YoY
Boyd Thermal contributed 31 points
- Aerospace$1.20 BShare 13.4%▲ 10.8% YoY
- Mobility$852 MShare 9.5%▲ 9.9% YoY
Key Metrics
Free Cash Flow
$1.03 B
Press Release
Operating Cash Flow
$1.31 B
Press Release
Electrical Americas Margin
29.8%
Press Release
Electrical Global Margin
21.1%
Press Release
Aerospace Margin
24.9%
Press Release
Shares are computed over the segment total: $8.95 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our strong third quarter performance reflects the focus and discipline our teams have demonstrated all year as we expand capacity, strengthen execution and position the business to meet accelerating customer demand. We delivered organic growth and segment margins above the high end of our guidance, driven by strong demand across our markets and continued momentum across our Electrical businesses. Record orders grew sequentially, backlog continued to expand, and we remain well-positioned to help customers deliver on their critical power infrastructure investments.”
- Capacity Expansion
- Record Orders and Backlog
- Critical Power Infrastructure Demand
Summary and Review
Summary
Eaton reported third-quarter revenue of $8.95 billion. That is up 28% from a year ago and 5.5% above the market expectation. Adjusted earnings per share came in at $3.68, beating the estimate by 4.0%. The revenue and earnings gates are open. The guidance gate is in line: the full-year adjusted EPS midpoint of $13.75 is only 1.2% above expectations. The fourth-quarter midpoint of $4.10 matches the estimate. Still, organic growth, margin and EPS all beat the high end of the company's own range.
The stock had closed at $366.07 the day before and had been sliding for weeks. On earnings day it rose 6.1% intraday. Orders drove the move: total backlog grew 46% in Electrical and 33% in Aerospace. The market did not read this report as a profit story. It read it as a demand story. Even so, shares remain about 19% below their 52-week high of $478. The one-year return is just 0.5%.
The score is 73 with a buy view. Two gates are open and the guidance gate is in line; the decision table gives this combination a 70-79 band. We stay in the lower half because of the bottom line. GAAP earnings per share rose only 7%. Acquisition debt lifted net interest expense from $67 million to $198 million. A roughly 5-point slowdown in fourth-quarter organic growth is the second caveat. Still, orders and backlog give solid footing within the band.
Full Review
The top of guidance was beaten on three lines.
In July the company guided the third quarter to 13.5-15.5% organic growth, a 24.6-25.0% segment margin and adjusted EPS of $3.46-3.56. Actual organic growth was 19%. Segment margin hit a record 25.3%, 0.3 points above a year earlier. Adjusted EPS of $3.68 beat the top of the range by $0.12. Two tests we listed last quarter, the margin promise and the EPS range, are now behind us. Acquisitions added 8 points to total growth and currency added 1 point. Mobility margin widened 3.7 points year over year to 17.2%. In Aerospace, margin narrowed 1.0 point to 24.9%. For a primer on reading earnings day, see our guide.
Electrical Americas margin recovered with capacity.
The largest segment, Electrical Americas, posted $4.17 billion in revenue. Organic growth was 22%. Operating profit rose 20% to $1.24 billion. Margin widened 2.3 points sequentially to 29.8%. The price-cost recovery we flagged last quarter has begun. The annual comparison looks different: margin was 30.3% a year ago, so it is still 0.5 points behind. According to the company presentation, the second-half margin ramp comes from new capacity turning into output. Rolling twelve-month orders rose 39% organically. Total backlog grew 33% year over year. Data center revenue rose about 65%, as cited on the earnings call and in the presentation. Orders growing faster than sales partly secure revenue for the coming quarters.
Electrical Global became a new growth engine.
Electrical Global revenue rose 58% year over year to $2.73 billion. Organic growth contributed 27 points and Boyd Thermal 31 points. Organic growth accelerated from 18% in the second quarter to 27%. Operating profit rose 75% to $576 million. Margin widened 2.0 points from a year earlier to 21.1%. Last quarter we noted the worry that Boyd integration would weigh on margin. This quarter that worry did not materialize. The segment's total backlog grew 121% year over year. The Electrical businesses' rolling twelve-month book-to-bill stands at 1.2. That means incoming orders are outpacing shipments. Boyd Thermal completes its first year under Eaton in March 2027. After that, Boyd's growth will also count toward the organic rate.
The cost of growth sits on the balance sheet.
Acquisitions left a mark on the lower lines of the income statement. Long-term debt rose from $8.76 billion at the start of the year to $17.80 billion. Net interest expense climbed from $67 million to $198 million year over year. Intangible amortization rose from $130 million to $314 million. As a result, GAAP earnings per share rose only 7% to $2.77. Adjusted earnings grew 20%. That gap makes it matter which profit definition you watch. Full-year GAAP guidance of $10.39-10.49 is nearly flat with $10.45 in 2025. Cash is solid: quarterly free cash flow was $1.03 billion. The COL Group deal signed in September is another pending acquisition. Combining Mobility with Dana will simplify the portfolio. For more, see the cash flow guide.
Next quarter, watch one line: organic growth.
The company guides fourth-quarter organic growth to 13-15%. That is roughly a 5-point slowdown from 19% in the third quarter. This quarter Eaton beat the top of its own range by 3.5 points. If the actual figure again lands above 15%, guidance was conservative and the demand story holds. If it falls below 13%, the third quarter was a peak. In that case, investors will ask how fast the 46% backlog growth is turning into shipments. The second gauge is net interest expense. If it stays near $200 million a quarter, GAAP profit will struggle to track adjusted profit. To apply the test yourself, check the organic growth line in the February release. That rate strips out acquisitions and currency.
Looking Ahead
Strengths and Risks
5 Strengths · 6 RisksStrengths
5- Organic growth of 19%, segment margin of 25.3% and adjusted EPS of $3.68 all beat the high end of guidance.
- Total backlog rose 46% in Electrical and 33% in AerospaceRolling twelve-month book-to-bill is 1.2 in both.
- Electrical Global organic growth reached 27% and operating margin widened 2.0 points year over year to 21.1%.
- Full-year organic growth guidance rose from 11-13% to 13-15%, and adjusted EPS guidance rose to $13.70-13.80.
- Quarterly free cash flow was $1.03 billion, while capital spending was $275 million.
Risks
6- Long-term debt rose from $8.76 billion at the start of the year to $17.80 billionNet interest expense nearly tripled.
- GAAP earnings per share rose only 7%, and full-year GAAP guidance is nearly flat with $10.45 in 2025.
- Fourth-quarter organic growth guidance of 13-15% implies a roughly 5-point slowdown from 19% in the third quarter.
- Electrical Americas margin recovered sequentially but remains 0.5 points below 30.3% a year ago.
- Aerospace margin narrowed 1.0 point year over year to 24.9%.
- Much of the growth depends on data center spendingAny slowdown in AI investment would hit orders directly.
What to Watch
5- Q4 2026 earnings are expected in early February 2027, showing whether organic growth lands in the 13-15% range.
- Closing the COL Group acquisition will expand medium-voltage distribution capacity in Europe.
- Once Mobility is separated through its combination with Dana, the company will focus on electrical and aerospace.
- Boyd Thermal will count toward organic growth from March 2027, affecting Electrical Global's organic rate.
- Large cloud companies' 2027 capital budgets will shape the next wave of data center orders.
Upcoming Earnings
To Understand This