ETN · Q4 2025 Earnings

Cautious

Eaton Corporation

Reported February 3, 2026

30-second summary

Eaton closed FY2025 with a mixed Q4 print — $7.06B revenue (+13% YoY headline, but 9% organic + 2% acquisitions + 2% FX), with organic growth of 9% landing below the 10-12% guide. Segment margin (24.9% vs 24.2-24.6% guide) and adjusted EPS ($3.33, midpoint of $3.23-$3.43 guide) met or beat. FY organic of 8% came in below the prior 8.5-9.5% guide, though FY adjusted EPS of $12.07 hit the midpoint and FY GAAP EPS of $10.45 landed in the upper half of the $10.29-$10.49 guide. The hesitation is forward: FY2026 organic growth guided to 7-9%, Q1 organic guide of just 5-7%, and a first-half EPS shape that's 44% of the year due to Electrical Americas ramp costs of ~130bps front-loaded into Q1-Q2.

Headline numbers

EPS

Q4 FY2025

$3.33

Revenue

Q4 FY2025

$7.05B

+13.0% YoY

Gross margin

Q4 FY2025

36.8%

Free cash flow

Q4 FY2025

$1.57B

Operating margin

Q4 FY2025

24.9%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$7.05B	+13.0%	$6.99B	+1.0%
EPS	$3.33	—	$3.07	+8.5%
Gross margin	36.8%	—	38.2%	-140bps
Operating margin	24.9%	—	25.0%	-10bps
Free cash flow	$1.57B	—	$1.17B	+34.2%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Earnings Per Share (GAAP)	Q4 FY2025	$2.75 to $2.95	$2.91	in-line (at midpoint of $2.85 guide)	Beat
Adjusted Earnings Per Share	Q4 FY2025	$3.23 to $3.43	$3.33	in-line (at midpoint of $3.33 guide)	Beat
Organic Growth	Q4 FY2025	10-12%	13%	+1.0-3.0 percentage points above the high end of guide	Beat
Segment Margins	Q4 FY2025	24.2-24.6%	24.9%	+0.3-0.7 percentage points above the high end of guide	Beat

New guidance

Metric	Period	Guide	YoY
Earnings Per Share (GAAP)	FY 2026	$11.57 to $12.07	—
Adjusted Earnings Per Share	FY 2026	$13.00 to $13.50	—
Organic Growth	FY 2026	7-9%	—
Segment Margins	FY 2026	24.6-25.0%	—
Earnings Per Share (GAAP)	Q1 FY2026	$2.29 to $2.49	—
Adjusted Earnings Per Share	Q1 FY2026	$2.65 to $2.85	—
Organic Growth	Q1 FY2026	5-7%	—
Segment Margins	Q1 FY2026	22.2-22.6%	—

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Electrical Americas	$3.506B	+20.7%
Electrical Global	$1.728B	+10.1%
Aerospace	$1.111B	+14.4%
Vehicle	$0.586B	-9.4%
eMobility	$0.125B	-14.9%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Electrical Americas 12-month rolling order growth	16% organic
Electrical Americas backlog growth YoY	31%
Electrical Global 12-month rolling order growth	6% organic
Electrical Global backlog growth YoY	19%
Aerospace 12-month rolling order growth	11% organic
Aerospace backlog growth YoY	16%
Book-to-bill ratio (Electrical businesses, rolling 12-month)	1.1
Book-to-bill ratio (Aerospace, rolling 12-month)	1.1

Management tone

Customer optimization hangover → AI experiments / order trough → Order inflection + capacity ramp → Orders inflected, revenue missed organic guide, FY26 cadence reset to digest

Three quarters ago Electrical Americas TTM orders were -4% and the question was whether the cycle had broken. Two quarters ago they flipped to +2% and management framed it as inflection. Last quarter they accelerated to +7% and management took the unusual step of publishing a Q4 organic guide (10-12%) well above the just-reported quarter. This quarter the orders delivered (Electrical Americas TTM +16%, data center orders +200% YoY) but Q4 organic revenue of 9% came in below the 10-12% guide — the conversion of orders to revenue ran a step behind the order book. "Our growing and diversified backlog provides us with extended visibility, enabling predictable financial performance and disciplined capital planning." The order-inflection thesis is intact on the order side; the revenue-conversion side missed the bar management set.

The FY2026 organic guide of 7-9% is the tonal pivot. Last quarter management guided FY25 organic to 8.5-9.5%; it landed at 8%, below. Against +16% TTM orders in Electrical Americas and 31% backlog growth, management chose to guide FY26 at 7-9% — bracketing the FY25 actual. Per Wolfe Research's exchange, management explicitly declined to refresh the 2030 plan despite acknowledging data center upside (FY25 data center grew 44% in Americas vs the 17% included in the original 2030 plan) and four accretive acquisitions not in the original framework. The phrase "no investor day planned for 2026 to focus on execution" is the cleanest signal of the new posture: conservative guidance, deliver, then reset targets after portfolio moves complete.

The first-half / second-half EPS shape introduces a new asterisk that wasn't present last quarter. Per Morgan Stanley's exchange, H1 EPS will be 44% of the year, H2 56%, driven by tax rate (20-21% H1 vs 16-17% H2) and Electrical Americas ramp costs of ~130bps front-loaded into Q1-Q2. Q1 segment margin guided at 22.2-22.6% — roughly 230bps below Q4's 24.9% — quantifies the ramp drag. The 24-project, $1.5B capacity program with half complete by mid-2025 and construction-finish on the remainder by H1 2026 is the operating-capex story management is asking investors to be patient with. Q1 organic at 5-7% versus Q4's just-reported 9% is a meaningful sequential deceleration — the FY26 cadence starts soft.

Liquid cooling reframing is the new platform story replacing last quarter's "utility to chip" framing. Per Bank of America's exchange, the accessible-dollar-per-megawatt has expanded from $2.9M to $3.4M post-Boyd, with Boyd targeted at $1.7B of revenue in 2026. The narrative quality has hardened from positioning into measurable contribution.

Recurring themes management leaned on this quarter:

Electrification and energy transition tailwindsPricing power and margin expansionOperational efficiency and cost controlDiversified end-market resilienceM&A integration successGeographic and segment balance

Risks management surfaced:

Macroeconomic uncertainty and customer spending patternsCommodity cost volatilityCurrency headwindsIntegration execution on recent acquisitionsCompetitive pricing pressure

Q&A highlights

Andrew Obin · Bank of America

What gives confidence in double-digit data center growth in 2026 and beyond, and what is the outlook on liquid cooling technology following recent NVIDIA announcements?

Paolo provided extensive market evidence (200%+ growth in announcements, 11 years of backlog, 100% increase in project starts) and detailed Eaton's differentiated portfolio across white space, gray space, and front-of-meter solutions. On liquid cooling, he explained Eaton's focus on inner-loop cooling (cold plates, CDUs) rather than chillers, and described NVIDIA's announcement as positively impacting Eaton's accessible market dollar-per-megawatt from $2.9M to $3.4M post-Boyd acquisition.

Data center announcements up 200% YoY in 202511 years of backlog at current build ratesProject kickoffs up 100% YoYQ4 electrical Americas orders up 200% in data centers, Europe up 80% YoY

Chris Snyder · Morgan Stanley

Explain the quarterly EPS cadence showing low single-digit growth in Q1 but 10% full-year growth, and provide detail on capacity expansion challenges and timeline for margin recovery.

Paolo explained the 44% first-half / 56% second-half EPS split is driven by higher tax rates in H1 (20-21% vs 16-17%) and front-loaded Electrical Americas ramp costs of ~130 basis points, with higher impact in Q1-Q2. On capacity, he outlined a 24-project, $1.5B program with half completed by mid-2025 and construction for remaining half done by H1 2026. The cadence is Q1 as stated guidance, Q2 progress, Q3 momentum, Q4 stronger backlog liquidation.

H1 EPS expected at 44% of full-year, H2 at 56%Tax rate 20-21% in H1 vs 16-17% in H2Electrical Americas ramp impact ~130 basis points for full 2026, front-end loaded24 capacity expansion projects in Electrical Americas

Nigel Ko · Wolf Research

Clarify Q1 margin guidance relative to Q4, and reassess long-term 2030 targets given portfolio changes (mobility spinoff), inorganic additions (acquisitions), and data center upside versus original March 2024 plan.

Olivier clarified that most ramp-cost impact is concentrated in Q1-Q2, with sequential easing through the year. Paolo assessed the original 2030 plan (6-9% growth, 28% margins, 12%+ EPS CAGR) against new realities: major upside from data center (included only 17% vs 33% industry forecast, achieving 44-49% actual), inorganic accretion from Resilient Power/FibreBond/UltraPCS/Boyd (not in original plan), and portfolio optimization via mobility spinoff. However, he noted caution on short-cycle businesses and stated 2030 targets will be refreshed after portfolio moves complete; no 2026 investor day planned.

Original 2030 targets: 6-9% growth, 28% margins, 12%+ EPS CAGRData center industry forecast 33%; Eaton included only 17% in plan2025 actual data center growth 44% (Americas) and 49% (not specified regional), 36% globalFour acquisitions (Resilient Power, FibreBond, UltraPCS, Boyd) accretive but not in original plan

Nicole DeBlase · Deutsche Bank

Confirm sequential margin decline in Q1 is primarily from Electrical Americas capacity ramp, and provide detail on non-data center order trends in Electrical Americas.

Olivier confirmed Q1 margin compression versus Q4 is mostly Electrical Americas ramp-related, with pressure concentrated in Q4 and Q1 then easing through year. Paolo detailed non-data center strength: utilities orders on 12-month basis up low teens (Americas) and mid-single digits (global); aerospace orders up 11% on 12-month basis with margins improving 19 basis points; short-cycle businesses showing green shoots, inflecting positively in global with U.S. inflection expected.

Electrical Americas 12-month orders up low teens in utilitiesElectrical Global 12-month utility orders up mid-single digitsElectrical Americas sales up mid-single digits YoY in utilitiesElectrical Global sales up 10% YoY

Dean Dre · RBC Capital Markets

What is the customer mix in data center orders (hyperscale vs. colo vs. enterprise), are multi-year supply agreements still being signed, and where does Eaton stand on 800-volt DC technology?

Paolo declined to provide specific customer mix breakdown, noting the portfolio has become much more balanced across all hyperscalers and key multi-tenants (previously concentrated). He stated multi-year pre-booking dynamic has ended; current order-to-delivery windows are 12-18 months. On 800-volt DC, Resilient Power leads the technology; Eaton is working with authorities on codes and has a seat at the table, partnering with chipmakers and hyperscalers on new designs.

2025 order mix was 50% cloud, 50% AI (vs. historical cloud-dominant)2025 revenue mix was 70% cloud, 30% AICurrent order-to-delivery window 12-18 months

Answers to last quarter's watch list

Q4 organic growth print against the 10-12% guide — Q4 organic came in at 9%, below the low end of the guide. The order-inflection narrative is intact (TTM orders +16% in Electrical Americas) but revenue conversion fell short of the bar management set.

Resolved negatively

FY adjusted EPS — Q4 landing zone $3.23-$3.43 — Q4 adjusted EPS landed at $3.33, the exact midpoint of the guide; FY adjusted EPS landed at $12.07, the midpoint of the $11.97-$12.17 guide. Clean execution to the held EPS guide despite the organic revenue miss.

Resolved positively

GAAP vs adjusted EPS gap — Q4 GAAP EPS was $2.91 against adjusted $3.33, a $0.42 gap; for the year, GAAP came in at $10.45, within the $10.29-$10.49 range. The gap did not blow out further.

Resolved positively

Data center concentration in Electrical Americas growth — data center orders grew +200% YoY in Q4 Americas and data center sales were up ~40%, dominating the order mix. Non-DC contributed via Aerospace organic +12% and Electrical Global organic +6%. Concentration risk remains real but management did provide diversification evidence.

Continue monitoring

eMobility revenue trajectory — Q4 eMobility revenue declined 15% YoY total (17% organic). Management announced intent to spin off the Mobility business (Vehicle + eMobility) into a separate publicly traded company by end of Q1 2027.

Continue monitoring

Electrical Americas operating margin into 2026 — Q4 Electrical Americas segment delivered strong revenue growth (+21% total, +15% organic) at 29.8% margin, but Q1 FY26 total segment margin guide of 22.2-22.6% signals ~130bps of ramp drag front-loaded into H1. Management committed to ~30% Electrical Americas segment margin for FY26 at the midpoint and reaffirmed the 32% margin corridor by 2030. The trajectory is intact but H1 will look worse before it gets better.

Continue monitoring

What to watch into next quarter

Q1 FY26 organic growth print against the 5-7% guide — sequential deceleration from Q4's 9%. A print below 5% would compound the Q4 organic miss and call into question the FY26 7-9% framework. A print at the high end would suggest the Q1 guide was conservatively set.

Electrical Americas segment margin in Q1 vs Q4's 29.8% — management has framed ~130bps of full-year drag front-loaded into Q1-Q2. Watch whether sequential compression matches the framework or runs hotter, which would signal capacity ramp is more expensive than disclosed.

Whether FY26 adjusted EPS guide is raised at Q1 — guide is $13.00-$13.50 (+7-12% YoY). A Q1 print at the high end of the $2.65-$2.85 range with no FY raise would be unusual for this management team; a raise would suggest the 7-9% organic guide is conservative.

Data center order growth rate in Electrical Americas after Q4's +200% — comparing 12-month order growth would normalize the prior-year base; watch whether the TTM moves above +16% or whether the Q4 spike was lumpy.

Boyd revenue contribution against the $1.7B 2026 target — first-quarter run-rate is the cleanest read on whether the liquid cooling thesis is on plan; below $400M would imply a ramp issue.

Mobility spinoff execution timeline — management announced intent to spin off Vehicle + eMobility by end of Q1 2027. Form 10 filing, financial framework, and segment-level disclosure cadence would materially reshape the segment mix.

Sources

Eaton Q4 2025 earnings press release (SEC Form 8-K Exhibit 99): https://www.sec.gov/Archives/edgar/data/1551182/000155118226000002/etn12312025exhibit99.htm
Q4 2025 earnings call Q&A exchanges with Bank of America, Morgan Stanley, and Wolfe Research

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