Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Eaton Corporation plc's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 10.3% to 6.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 83, DIO 93). At a 8.6% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $291.71 per share, suggesting ETN is overvalued by 19.0% at the current price of $360.18.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,997 | 5,459 | 5,949 | 6,805 | 7,268 | 7,449 |
| (−) Net Interest | 218 | 238 | 259 | 297 | 317 | 325 |
| (+) D&A | 548 | 619 | 703 | 774 | 867 | 888 |
| EBITDA | 5,763 | 6,316 | 6,911 | 7,876 | 8,451 | 8,662 |
| (−) Tax | 908 | 992 | 1,080 | 1,236 | 1,320 | — |
| (−) CapEx | 933 | 1,019 | 1,110 | 1,270 | 1,357 | — |
| (−) ΔWC | 320 | 579 | 613 | 1,073 | 579 | — |
| Free Cash Flow (FCF) | 3,602 | 3,727 | 4,107 | 4,296 | 5,195 | — |
| Peers' EBITDA Multiple | 18.7x | |||||
| Terminal Value | 161,896 | |||||
| WACC / Discount Rate | 8.58% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,457 | 3,294 | 3,343 | 3,221 | 3,586 | 107,252 |
| Enterprise Value | 124,153 | |||||
| Projection Period | 16,900 | 13.6% | ||||
| Terminal Value | 107,252 | 86.4% | ||||
| (−) Current Net Debt | 10,547 | |||||
| Equity Value | 113,606 | |||||
| (÷) Outstanding Shares | 390M | |||||
| Fair Price | $292 | -19.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.7x | 16.7x | 18.7x | 20.7x | 22.7x |
|---|---|---|---|---|---|
| 6.6% | $256 | $288 | $321 | $353 | $385 |
| 7.6% | $244 | $275 | $306 | $337 | $367 |
| 8.6% | $233 | $262 | $292 | $321 | $351 |
| 9.6% | $222 | $250 | $278 | $307 | $335 |
| 10.6% | $212 | $239 | $266 | $293 | $320 |
Current price: $360.18. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.