Eaton Corp. plc (NYSE:ETN)

Goodwill

Goodwill increased notably from 12,903 million USD in 2020 to a peak of 14,977 million USD in 2023, followed by a slight decline to 14,713 million USD in 2024. This indicates initial growth in acquisitions or revaluations, with minor adjustments or impairments in the most recent year.

Trademarks (first series)

The value of trademarks not subject to amortization showed a gradual decline from 1,382 million USD in 2020 to 1,200 million USD in 2024, indicating possible disposals, impairments, or changes in brand valuation.

Customer relationships

Customer relationships rose sharply from 3,415 million USD in 2020 to 4,752 million USD in 2021, then slightly fluctuated downward to 4,659 million USD by 2024. This suggests significant investment or acquisition in 2021, with stabilization or minor declines thereafter.

Patents and technology

This category displayed steady growth from 1,428 million USD in 2020 to 1,987 million USD in 2022, followed by relative stability near 1,979 million USD by 2024, reflecting continued investment or capitalization in intellectual property assets.

Trademarks (second series)

The trademarks subject to amortization increased from 970 million USD in 2020 to a peak of 1,123 million USD in 2023, then declined slightly to 1,107 million USD in 2024. This pattern may reflect new trademark acquisitions with subsequent amortization impact.

Other intangible assets

Other intangibles rose from 91 million USD in 2020 to 176 million USD in 2023, with a minor reducing adjustment to 169 million USD in 2024. This suggests growth in miscellaneous intangible assets with modest recent decreases.

Intangible assets subject to amortization, historical cost

The historical cost of amortizable intangible assets increased substantially from 5,904 million USD in 2020 to 8,031 million USD in 2023, followed by a slight decrease to 7,914 million USD in 2024. This trend demonstrates increased investments in amortizable intangibles, with a small reduction recently possibly due to disposals or reclassifications.

Accumulated amortization

Accumulated amortization grew consistently in magnitude from -3,111 million USD in 2020 to -4,456 million USD in 2024, reflecting systematic expensing of intangible asset costs over time.

Intangible assets subject to amortization, net

Net amortizable intangible assets increased sharply from 2,793 million USD in 2020 to 4,481 million USD in 2021, then declined steadily to 3,458 million USD by 2024, indicating initial additions outweighed amortization, followed by amortization exceeding new capitalizations in later periods.

Other intangible assets (aggregated)

The aggregate value reported under other intangible assets climbed from 4,175 million USD in 2020 to a high of 5,855 million USD in 2021, then progressively declined to 4,658 million USD by 2024. This trajectory implies initial intangible asset growth with subsequent depreciation or disposals reducing the net balance.

Goodwill and other intangible assets (total)

The combined goodwill and other intangible assets peaked at 20,606 million USD in 2021, followed by a gradual decline to 19,371 million USD in 2024. This overall trend aligns with the individual asset class movements, showing early growth followed by mild contraction over the latter years.

Total Assets

The reported total assets exhibited a steady upward trend from 31,824 million US dollars in 2020 to a peak of 38,432 million US dollars in 2023, followed by a slight decline to 38,381 million US dollars in 2024. In contrast, the adjusted total assets, excluding goodwill, increased gradually from 18,921 million US dollars in 2020 to 23,668 million US dollars in 2024, showing a consistent growth pattern without any declines.

Shareholders' Equity

Reported total shareholders’ equity for Eaton showed a positive trajectory from 14,930 million US dollars in 2020 to 19,036 million US dollars in 2023, with a subsequent marginal decrease to 18,488 million US dollars in 2024. The adjusted shareholders’ equity, which excludes goodwill effects, presented a different scale and dynamics, starting at 2,027 million US dollars in 2020 and decreasing to 1,662 million US dollars in 2021, before rising considerably to 4,059 million US dollars in 2023 and then slightly declining to 3,775 million US dollars in 2024.

Comparative Insights

The gap between reported and adjusted figures highlights the significant impact of goodwill on the company’s asset and equity base. While reported figures are substantially higher, indicating the presence of intangible assets, the adjusted figures show more conservative values, emphasizing underlying tangible asset growth and real equity value. The increasing trend in adjusted assets and equity suggests improvement in the underlying operational asset base and equity quality, despite slight fluctuations in the most recent year.

Overall Trends

A general upward trend is observed in both asset and equity measures over the five-year period, with a notable acceleration in adjusted metrics from 2022 to 2023. The slight declines in 2024 in reported assets and equity, as well as adjusted equity, may warrant further investigation to understand underlying operational or market influences affecting the company's financial position during that year.

The financial data exhibits discernible trends across multiple key performance metrics over the five-year period. There is a noticeable progression in asset utilization, leverage, and profitability indicators, with distinctions between reported figures and those adjusted for goodwill.

Total Asset Turnover

The reported total asset turnover ratio demonstrates a steady upward trend, rising from 0.56 in 2020 to 0.65 in 2024. This suggests incremental improvement in the efficiency with which the company utilizes its assets to generate sales. The adjusted total asset turnover, which accounts for goodwill, begins at a significantly higher level of 0.94 in 2020 and experiences fluctuations, peaking at 1.05 in 2024 after a slight dip in 2023. This indicates that when goodwill is excluded, asset utilization appears more efficient, though there is some variability in this efficiency across years.

Financial Leverage

The reported financial leverage ratio remains relatively stable throughout the period, with a slight decline from 2.13 in 2020 to 2.08 in 2024, indicating a modest reduction in reliance on debt or other financing sources relative to equity. The adjusted financial leverage ratio, however, presents a very different pattern. It starts at a high level of 9.33 in 2020, peaks sharply at 11.6 in 2021, and then declines substantially to 6.27 by 2024. This significant volatility suggests that excluding goodwill markedly changes the leverage perspective, likely reflecting goodwill’s impact on equity and obligations structure.

Return on Equity (ROE)

The reported ROE shows a pronounced upward trajectory, growing steadily from 9.44% in 2020 to 20.52% in 2024, reflecting improved profitability and return generated on shareholders’ equity. The adjusted ROE, excluding goodwill, presents much higher values overall but also notable fluctuations; it soars from 69.56% in 2020 to a peak of 129% in 2021, then decreases to 79.28% in 2023 before rising again to 100.5% in 2024. These amplified figures suggest that goodwill adjustments reveal a significantly higher but more volatile equity return dynamic.

Return on Assets (ROA)

The reported ROA trend mirrors that of ROE but with more moderate increases, ascending from 4.43% in 2020 to 9.89% in 2024. This incremental improvement indicates enhanced overall asset profitability. The adjusted ROA presents consistently higher returns, starting at 7.45% and increasing to 16.03% over the same period. The steady rise in adjusted ROA suggests that when the effect of goodwill is removed, asset profitability appears considerably stronger and improves consistently year over year.

Overall, the data reveals that the company has progressively enhanced its operational efficiency and profitability from 2020 through 2024. Adjustments for goodwill generally elevate the ratios, indicating goodwill has a dampening effect on the apparent financial efficiency and returns when included. The volatility observed in adjusted financial leverage and adjusted ROE highlights the significant impact of goodwill on the company’s financial structure and performance metrics. Despite this, the underlying trend across both reported and adjusted data indicates sustained growth in asset turnover, controlled leverage, and improved returns to equity holders and on assets.

Total Assets

The reported total assets show an overall increasing trend from 31,824 million USD in 2020 to 38,381 million USD in 2024, indicating steady growth in the asset base over the five-year period. The increase is more pronounced between 2022 and 2023, where assets rose from 35,014 million USD to 38,432 million USD before slightly declining in 2024 to 38,381 million USD. The adjusted total assets, which exclude goodwill, also demonstrate a consistent upward trajectory, growing from 18,921 million USD in 2020 to 23,668 million USD in 2024. This increase suggests underlying asset growth independent of goodwill adjustments.

Total Asset Turnover

The reported total asset turnover ratio shows a gradual improvement, moving from 0.56 in 2020 to 0.65 in 2024. This trend reflects increased efficiency in utilizing the reported assets to generate sales over time. In contrast, the adjusted total asset turnover ratio starts higher at 0.94 in 2020 and rises to 1.05 in 2024, although there is a slight dip in 2023 to 0.99. The higher values of the adjusted ratio indicate that when goodwill is removed, the company appears more efficient in asset utilization. The temporary decline in 2023 could be indicative of a short-term decrease in operational efficiency or an increase in adjusted asset levels relative to sales during that year.

Insights

The consistent increase in both reported and adjusted total assets coupled with improving asset turnover ratios suggests that the company is experiencing growth while enhancing the efficiency of its asset base. The difference in magnitude between reported and adjusted figures highlights the impact of goodwill on asset values and performance metrics. The upward trend in adjusted asset turnover is particularly notable, indicating that core operational assets are being utilized more effectively over time.

Total Assets

Reported total assets showed a steady upward trend from 31,824 million US dollars in 2020 to a peak of 38,432 million in 2023, followed by a slight decline to 38,381 million in 2024. Adjusted total assets, which presumably exclude goodwill, also increased consistently from 18,921 million in 2020 to 23,668 million in 2024, reflecting a continuous underlying growth in tangible or non-goodwill assets over the five-year period.

Shareholders’ Equity

Reported total Eaton shareholders’ equity increased steadily from 14,930 million in 2020 to 19,036 million in 2023, before experiencing a minor decline to 18,488 million in 2024. In contrast, adjusted shareholders’ equity, which adjusts for goodwill, demonstrated more volatility but an overall increasing trend, starting at 2,027 million in 2020, dipping slightly to 1,662 million in 2021, and then rising significantly to 4,059 million in 2023 before a small decrease to 3,775 million in 2024. This pattern suggests improved tangible equity values adjusted for goodwill over time, despite some fluctuations.

Financial Leverage

Reported financial leverage ratios showed a gradual decline from 2.13 in 2020 to a low of 2.02 in 2023, indicating a moderate reduction in leverage, before a slight increase to 2.08 in 2024. Conversely, adjusted financial leverage ratios showed greater variability, rising sharply from 9.33 in 2020 to 11.6 in 2021, then declining to 9.02 in 2022, further dropping to 5.78 in 2023, and slightly increasing again to 6.27 in 2024. These adjusted leverage fluctuations imply changing capital structure dynamics when goodwill is excluded, with a notable deleveraging trend between 2021 and 2023.

Overall Insights

The company’s reported financial metrics indicate steady asset and equity growth with relatively stable leverage over the five-year period. Adjusted metrics, which remove the impact of goodwill, reveal more pronounced volatility, particularly in shareholders’ equity and leverage ratios, reflecting underlying changes in tangible asset values and capital structure. The decline in adjusted financial leverage after 2021 suggests improved balance sheet strength in terms of tangible capital, even as reported leverage remains relatively stable. This analysis highlights the importance of considering both reported and adjusted figures for a comprehensive understanding of financial health.

The data reveals distinct trends in both reported and adjusted financial metrics over the five-year period from 2020 to 2024.

Reported Total Eaton Shareholders’ Equity

This metric shows a consistent upward trend from 14,930 million USD in 2020 to a peak of 19,036 million USD in 2023, followed by a slight decline to 18,488 million USD in 2024. The growth from 2020 through 2023 indicates strengthening equity, potentially due to retained earnings or capital injections, while the decrease in 2024 could suggest either dividend payments, share repurchases, or losses impacting equity.

Adjusted Total Eaton Shareholders’ Equity

Contrasting the reported equity, the adjusted equity, which likely removes goodwill effects, starts significantly lower at 2,027 million USD in 2020 and declines slightly in 2021 to 1,662 million USD. Subsequently, it rises to 2,242 million USD in 2022 and then sharply increases to 4,059 million USD in 2023, before modestly decreasing to 3,775 million USD in 2024. This pattern suggests adjustments have a strong impact on equity composition and highlight significant changes in non-goodwill equity components, especially the sharp increase in 2023.

Reported Return on Equity (ROE)

The reported ROE shows a consistent and substantial increase over the period, starting at 9.44% in 2020 and almost doubling to 20.52% by 2024. This steady rise signals improving profitability and efficient use of shareholders' equity, possibly reflecting enhanced operational performance or favorable market conditions.

Adjusted Return on Equity (ROE)

The adjusted ROE figures are notably higher and more volatile than reported ROE, beginning at an exceptionally high 69.56% in 2020 and peaking at 129% in 2021. It declines to approximately 79.28% in 2023 but rebounds to 100.5% in 2024. Such elevated and fluctuating adjusted ROE values may result from the relatively low base of adjusted equity, amplifying profitability ratios, and indicating substantial impacts of goodwill adjustments on financial performance metrics.

In summary, the reported data signals steady growth in equity and profitability, whereas the adjusted figures emphasize the significant influence of goodwill and other adjustments, leading to more pronounced fluctuations in equity and returns. The divergence between reported and adjusted metrics underscores the importance of considering both perspectives for a comprehensive financial analysis.

Total Assets

Reported total assets show an overall upward trend from 31,824 million US dollars in 2020 to 38,381 million US dollars in 2024, indicating steady growth in the company's asset base over the five-year period. The increase is more pronounced from 2022 to 2023, where reported assets rose from 35,014 million to 38,432 million, followed by a slight decrease in 2024. Adjusted total assets, which exclude goodwill, also exhibit a growing pattern, increasing from 18,921 million in 2020 to 23,668 million in 2024. Although the adjusted figures are consistently lower than the reported amounts, their growth rate appears slightly faster in recent years, particularly between 2022 and 2024.

Return on Assets (ROA)

Reported ROA reveals a positive trend, advancing from 4.43% in 2020 to 9.89% in 2024. This suggests improved efficiency in generating profits relative to the total assets reported on the balance sheet. The growth in ROA is incremental each year, with an increase of approximately 1 to 2 percentage points annually. Adjusted ROA, which is calculated using adjusted total assets excluding goodwill, shows a higher percentage return compared to the reported ROA, rising from 7.45% in 2020 to 16.03% in 2024. This indicates that when goodwill is excluded, the company's asset returns are more robust and improving at a steady pace. The difference between reported and adjusted ROA widens over time, emphasizing the growing impact of goodwill on asset valuation and profitability metrics.

General Insights

The consistent increase in both reported and adjusted total assets indicates expansion of the company's asset base, although the adjusted figures likely reflect more conservative valuation by excluding goodwill. The rising ROA metrics in both reported and adjusted terms suggest improving profitability and asset utilization efficiency. The larger gap between reported and adjusted figures over time may reflect increasing goodwill balances, which do not contribute directly to ROA, thereby underscoring the importance of considering adjusted metrics for a clearer view of operational efficiency. Overall, the data portrays a company strengthening its asset base while simultaneously enhancing its ability to generate returns from those assets.