Core Insights - Eaton Corporation reported record fourth quarter 2025 earnings per share of $2.91, with adjusted earnings per share reaching $3.33, also a record [1][4] - The company achieved fourth quarter sales of $7.1 billion, marking a 13% increase from the same period in 2024, driven by organic sales growth of 9% [2][3] - For the full year 2025, Eaton's sales totaled $27.4 billion, a 10% increase from 2024, with segment margins reaching a record 24.5% [3][4] Financial Performance - Fourth quarter operating cash flow was $2.0 billion and free cash flow was $1.6 billion, both records and up 23% and 17% respectively from 2024 [2][5] - For the full year 2025, operating cash flow was $4.5 billion and free cash flow was $3.6 billion, reflecting increases of 3% and 1% respectively over 2024 [5] - The company reported net income of $1.133 billion for the fourth quarter, up from $972 million in the previous year [23] Business Segments - The Electrical Americas segment achieved record sales of $3.5 billion in the fourth quarter, up 21% from 2024, with operating profits of $1.0 billion [9] - The Aerospace segment also reported record sales of $1.1 billion, a 14% increase from the previous year, with operating profits of $268 million [13] - The Vehicle segment experienced a decline in sales to $586 million, down 9% from the fourth quarter of 2024 [15] Strategic Outlook - Eaton's CEO highlighted the company's strategy of "Lead, Invest and Execute for Growth," which has driven strong demand and backlog growth [3][6] - The company anticipates organic growth of 7-9% and segment margins of 24.6-25.0% for the full year 2026 [8] - Eaton plans to pursue a spin-off of its Mobility business, which includes its Vehicle and eMobility segments, expected to be completed by the end of Q1 2027 [38]

Core Insights - Eaton Corporation (ETN) is anticipated to show improvements in both revenue and earnings for Q4 2025, with earnings estimated at $3.33 per share and revenues at $7.11 billion [1][6] Earnings Estimates - Fourth-quarter earnings estimates have decreased by 0.6% over the last 60 days, but still reflect a 17.67% increase compared to the same quarter last year [2] - ETN expects earnings to range between $3.23 and $3.43 per share, with quarterly revenues projected to increase by 13.87% year-over-year [2] Earnings Surprise History - Eaton has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 0.70% [3][4] Earnings Prediction Model - The current model does not predict an earnings beat for Eaton this quarter, as it has an Earnings ESP of -0.13% and a Zacks Rank of 3 (Hold) [7] Factors Driving Performance - Eaton's strong order wins are supported by a solid backlog and a book-to-bill ratio above 1, indicating stable demand for its products [9] - Growth is driven by electrification, global megatrends, energy transition, and reindustrialization, with significant demand from AI data centers [10] - Ongoing investments in R&D are enhancing product quality and innovation, contributing to expected organic revenue growth of 8.5-9.5% for the quarter [11] Share Repurchase Impact - The company's share repurchase program, funded by free cash flow, is likely to positively influence fourth-quarter earnings [12] Financial Performance Metrics - Eaton's trailing 12-month return on equity (ROE) stands at 24.36%, surpassing the industry average of 19.27%, indicating efficient use of shareholders' equity [13] Valuation Comparison - Eaton is currently trading at a premium compared to its industry, with a forward 12-month P/E ratio of 25.61, while the industry average is 23.03 [16]

SST四问四答： 下一代AIDC供电方案，0-1进程 有望加速 长江证券研究所电新研究小组 1 证券研究报告 • 证券研究报告 • 评级 看好 维持 分析师及联系人 分析师 邬博华 分析师 曹海花 分析师 司鸿历 SAC执业证书编号：S0490514040001 SAC执业证书编号：S0490522030001 SAC执业证书编号：S0490520080002 SFC执业证书编号：BQK482 SFC执业证书编号：BVD284 %% %% 2026-02-02 %% %% %% %% research.95579.com %% %% research.95579.com 2 01 SST是什么？ 02 SST为何必要？ 03 SST有何壁垒？ 04 SST进展几何？ 目 录 % research.95579.com 3 01 SST是什么？ %% %% %% %% research.95579.com 4 01 SST是什么：基于电力电子的高集成度供电架构 ➢ 固态变压器（SST, Solid-State Transformer）是基于电力电子技术的高频、高效率电能变换装置，可替代传统工频变压器，实现电压变换 ...

Core Viewpoint - Analysts expect Eaton (ETN) to report quarterly earnings of $3.33 per share, reflecting a year-over-year increase of 17.7%, with revenues projected at $7.11 billion, up 13.9% from the previous year [1] Earnings Projections - The consensus EPS estimate has been revised downward by 0.9% over the past 30 days, indicating a collective reassessment by analysts [1][2] - Revisions to earnings projections are critical for predicting investor behavior and are linked to short-term stock performance [2] Key Metrics Projections - Analysts project 'Net Sales- eMobility' to reach $150.51 million, indicating a year-over-year change of +2.4% [4] - 'Net Sales- Aerospace' is expected to be $1.10 billion, reflecting a +13.1% change from the prior year [4] - 'Net Sales- Vehicle' is forecasted at $588.71 million, showing a decline of -9% from the previous year [4] Segment Sales and Profit Estimates - 'Net Sales- Electrical Global' is estimated to be $1.71 billion, with a year-over-year change of +8.8% [5] - 'Net Sales- Electrical Americas' is projected at $3.55 billion, indicating a +22.2% change year over year [5] - 'Segment operating profit (loss)- Aerospace' is expected to be $261.86 million, up from $222.00 million a year ago [5] Segment Operating Profit Projections - 'Segment operating profit (loss)- Vehicle' is anticipated to reach $87.35 million, down from $122.00 million in the same quarter last year [6] - 'Segment operating profit (loss)- Electrical Global' is projected at $332.24 million, compared to $277.00 million a year ago [6] - 'Segment operating profit (loss)- Electrical Americas' is expected to be $1.04 billion, up from $918.00 million the previous year [7] - 'Segment operating profit (loss)- eMobility' is forecasted at $3.24 million, slightly up from $3.00 million in the same quarter last year [7] Stock Performance - Over the past month, Eaton shares have increased by +9.1%, outperforming the Zacks S&P 500 composite, which changed by +0.8% [7]

Core Insights - Eaton is collaborating with Flexnode to provide modular and scalable rack and power infrastructure for data centers, aiming to reduce deployment schedules by an average of 35% [1][2] - The partnership will enhance Eaton's modular offerings in the U.S., integrating its technologies with Flexnode's modular construction for efficient data center solutions [2][3] Company Overview - Eaton is an intelligent power management company with nearly $25 billion in revenues for 2024, serving customers in over 160 countries [8] - Flexnode specializes in digital infrastructure, focusing on AI factory deployment with a fully modular approach that integrates IT infrastructure and site development [5][6] Technological Advancements - The collaboration will enable the deployment of prefabricated IT infrastructure for high power density data halls ranging from 3.5 to 35 megawatts, supporting demanding compute requirements [3] - Eaton's modular strategy is designed to adapt to dynamic load profiles and facilitate scalable builds across various geographies, addressing the needs of AI, HPC, and quantum workloads [3]

Core Insights - Eaton's $4.3 billion business in electrical products is crucial for managing power in data centers, which are essential for the functioning of artificial intelligence [1][4]. - The company is focusing on data center construction and has recently acquired Boyd Thermal, a $1.5 billion business specializing in liquid-cooling technology for data centers [4]. - Eaton's sales increased by 10% and adjusted earnings rose by 8% in Q3 2025, with a backlog growth of 51% over the past two years, indicating strong future growth potential [5]. Company Overview - Approximately 75% of Eaton's revenue is derived from electrical products, with the remainder coming from automotive and aviation sectors [2]. - The company's offerings are designed to manage power, which is increasingly vital as global electricity demand rises [3]. Financial Performance - Eaton's stock has seen a price-to-earnings ratio of 33x, slightly above its five-year average of 32x, indicating that the stock may be considered expensive by value investors [6]. - Despite being 15% below recent highs, the stock's price-to-sales and price-to-book value ratios are also above long-term averages [6]. Investment Considerations - Eaton is viewed as a strong investment opportunity, particularly for aggressive growth investors who see potential in the expanding AI market [7]. - A significant pullback of 25% could present a more attractive buying opportunity for investors [7].

Core Viewpoint - Eaton Corporation is exploring strategic options for its automotive business, including a potential sale or spin-off, with an estimated valuation of up to $5 billion [1] Group 1: Strategic Evaluation - The company is working with advisory firms to assess multiple strategic options for its automotive division [1] - This strategic evaluation coincides with a period of weak growth in its traditional automotive business [1] Group 2: Business Focus - The move is seen as part of Eaton's strategy to optimize its business structure and focus on high-growth sectors, such as electrical and aerospace [1] - Core businesses are experiencing rapid growth, contrasting with the automotive segment's performance [1]

Core Viewpoint - Eaton Corporation plans to spin off its Vehicle and Vehicle Electrification Group into an independent publicly traded company as part of its new 2030 growth strategy, "Lead, Invest, Execute for Growth" [1][3] Group 1: Strategic Focus and Growth - The spin-off aims to enhance Eaton's focus on its core electrical and aerospace businesses while responding to industry trends such as electrification, digitalization, artificial intelligence, and increased infrastructure spending [3] - The company is confident that it can leverage its market advantages to capture growth opportunities and accelerate profit margins, thereby creating long-term value for shareholders [3] - The spin-off is seen as the right timing to allow the Vehicle and Vehicle Electrification Group to continue its leadership as a global supplier, with a concentrated strategic direction and flexible resource allocation [3] Group 2: Business Optimization and Acquisitions - Post-spin-off, Eaton will optimize capital allocation, focusing on high-growth, high-margin businesses with stable profitability [4] - Recent acquisitions, including Ultra PCS and Boyd Thermal, will help Eaton achieve a highly focused business portfolio to better meet strong demand in data centers, utilities, and aerospace markets [4] - The spin-off continues Eaton's successful practices in value creation and business transformation, following the sale of its lighting and hydraulic businesses in 2020 and 2021 [4] Group 3: Vehicle and Vehicle Electrification Group Overview - The Vehicle and Vehicle Electrification Group provides critical engineering solutions for power generation, distribution, and optimization across various vehicle types [6] - This business is a leading supplier in the commercial truck transmission and clutch market in the Americas and has significant advantages in high-voltage electric vehicle (EV) fuses and engine drive technologies globally [6] - The spin-off will enhance the strategic flexibility of the Vehicle and Vehicle Electrification Group, allowing it to effectively seize both short-term and long-term growth opportunities [6] Group 4: Transaction Details - The spin-off is expected to benefit both Eaton and the Vehicle and Vehicle Electrification Group by allowing for a more focused core business and strategic priorities [8] - A more targeted capital allocation strategy will enable flexible investments in profitable organic and inorganic growth opportunities [8] - The transaction is anticipated to be completed in the first quarter of 2027, subject to customary legal and regulatory approvals, and is expected to be tax-free for Eaton shareholders at the federal level [8]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the U.S. Semiconductors industry, particularly the AI value chain and its implications for various companies involved in hardware and semiconductor verticals [1][2] Core Insights and Arguments - A top-down framework is constructed to dimension the AI upside across sectors from 2025 to 2027, aimed at simplifying comparisons across different companies [2][19] - The analysis updates the breakdown of data center capital expenditures (capex) to reflect rising prices for DRAM and NAND, estimating an increase of approximately $70,000 per rack for server DRAM and $35,000 per rack for storage costs, raising all-in capex from $5.9 million to $6.0 million per rack [3][21] - Incremental revenue estimates per gigawatt (GW) of capacity are derived from market share estimates across nine key hardware/semiconductor verticals, with a regression analysis used to estimate margins on incremental AI revenue [4][23] Company-Specific Insights - **Unimicron and Ibiden** are highlighted as having significant upside potential, particularly in ABF substrate and HDI, with Unimicron expected to benefit from large opportunities [5][27] - **Nvidia (NVDA)** and **Broadcom (AVGO)** are identified as industry favorites, with Nvidia's AI substrate upgrade expected to double content generation [5][27] - **Intel (INTC)** and **Cisco** are noted to have lower exposure to AI opportunities compared to their market prominence, with Intel facing challenges in capturing market share [6][28][31] - **Delta Electronics** is rated as outperforming, with a price target of NT$1,300, benefiting from increased electrical content in AI data centers [13][30] - **MediaTek** is expected to see growth from the TPU ramp, while memory/storage players like **SanDisk**, **Samsung**, **Micron**, **SK Hynix**, and **KIOXIA** are projected to benefit from rapid memory price surges [6][30] Financial Metrics and Valuations - The report includes a detailed ticker table with performance metrics for various companies, including EPS and adjusted P/E ratios, indicating that Unimicron has room for growth while Intel appears expensive relative to its AI opportunities [9][29] - **Nvidia** is rated outperform with a target price of $275, while **AMD** is rated market perform with a target of $225, reflecting high expectations for AI growth [11][12] Additional Considerations - The analysis acknowledges that estimates of AI upside are imprecise and that valuations are influenced by various non-AI factors, suggesting that investors should consider their own assumptions for more accurate estimates [20][26] - The report emphasizes the importance of understanding the nuances of each company's position within the AI landscape, including their ability to adapt to evolving data center requirements [20][30] Conclusion - The semiconductor industry is poised for significant growth driven by AI, with specific companies like Unimicron and Ibiden positioned to capture substantial market share. However, challenges remain for established players like Intel, highlighting the dynamic nature of the sector and the need for careful analysis of individual company prospects [5][6][27][30]

Core Insights - The core contradiction of the electricity supercycle has shifted from "how to increase power generation capacity" to "how to improve electricity usage efficiency" [1] - A global electricity supercycle has begun as the U.S. anticipates a 50 GW power supply gap by 2030, yet capital market reactions reveal a significant cognitive bias [1][3] - Companies focused on power generation, such as Caterpillar and Cummins, have seen stock prices surge by 80% over the past year, while those in power distribution and management, like Eaton and Schneider, have declined by 10% [1][3] Market Understanding - The valuation divergence reflects a limited understanding of the electricity supercycle, with most investors fixated on "building more power plants" rather than optimizing electricity efficiency through technological innovation [3] - The demand explosion, driven by the AI industry's rapid growth, is a key factor, with electricity demand projected to grow at an annual rate of 3.5%, significantly outpacing historical trends [6] Technological Innovations - High-voltage technologies, such as 800V data center architecture and 765kV transmission lines, can enhance electricity efficiency by up to 5% without increasing generation capacity [5] - The 800V architecture addresses critical issues in current power systems, offering efficiency improvements, cost optimization, and space savings, potentially saving nearly $12 billion annually for a 1 GW data center [8] - The 765kV transmission lines, which have not been built in the U.S. for 20 years, can transport 2 to 2.5 GW of electricity, significantly reducing costs and land use compared to lower voltage lines [12][13] Market Dynamics - The current phase of the electricity cycle is characterized by a shift from capacity expansion to efficiency enhancement, with previously undervalued distribution and power management companies likely to recover and reshape market dynamics [5][7] - The market is witnessing a long-term opportunity in high-voltage transmission due to the significant capacity gap, despite some data centers considering on-site generation [13]