Eaton (NYSE: ETN) and Franklin Electric (NASDAQ:FELE) are both industrial products companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.
Insider & Institutional Ownership
78.9% of Eaton shares are owned by institutional investors. Comparatively, 77.9% of Franklin Electric shares are owned by institutional investors. 0.5% of Eaton shares are owned by company insiders. Comparatively, 2.5% of Franklin Electric shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Eaton has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, Franklin Electric has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500.
Eaton pays an annual dividend of $2.64 per share and has a dividend yield of 3.3%. Franklin Electric pays an annual dividend of $0.43 per share and has a dividend yield of 1.1%. Eaton pays out 56.8% of its earnings in the form of a dividend. Franklin Electric pays out 22.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Eaton has increased its dividend for 8 consecutive years and Franklin Electric has increased its dividend for 8 consecutive years.
This is a summary of recent ratings and target prices for Eaton and Franklin Electric, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Eaton currently has a consensus price target of $87.54, indicating a potential upside of 9.55%. Franklin Electric has a consensus price target of $47.33, indicating a potential upside of 16.16%. Given Franklin Electric’s higher possible upside, analysts clearly believe Franklin Electric is more favorable than Eaton.
Valuation & Earnings
This table compares Eaton and Franklin Electric’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Eaton||$20.40 billion||1.72||$2.99 billion||$4.65||17.18|
|Franklin Electric||$1.12 billion||1.69||$78.18 million||$1.92||21.22|
Eaton has higher revenue and earnings than Franklin Electric. Eaton is trading at a lower price-to-earnings ratio than Franklin Electric, indicating that it is currently the more affordable of the two stocks.
This table compares Eaton and Franklin Electric’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Eaton beats Franklin Electric on 9 of the 16 factors compared between the two stocks.
Eaton Company Profile
Eaton Corporation (Eaton) is a diversified power management company. It is engaged in the manufacturing of electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use, and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. On January 1, 2011, it closed the acquisition of the Tuthill Coupling Group, which is a division of the Tuthill Corporation. It has five segments: Electrical Americas and Electrical Rest of World; Hydraulics; Aerospace; Truck, and Automotive. On October 1, 2010, it acquired CopperLogic, Inc. On July 15, 2010, it acquired EMC Engineers, Inc. In May 2011, it acquired Internormen Technology Group. In August 2011, it acquired IE Power, Inc. In December 2011, it acquired E.A. Pedersen Company.
Franklin Electric Company Profile
Franklin Electric Co., Inc. designs, manufactures and distributes water and fuel pumping systems, consisting of submersible motors, pumps, electronic controls and related parts and equipment. Its segments include Water Systems segment, the Fueling Systems segment and Other. Its Water Systems segment is engaged in the production and marketing of water pumping systems and offers motors, pumps, drives, electronic controls and monitoring devices. It also designs, manufactures and sells motors, pumps, electronic controls and related parts and equipment for use in groundwater, wastewater and fuel transfer applications. Its Fueling Systems is engaged in the production and marketing of fuel pumping systems, fuel containment systems, and monitoring and control systems. It also designs, manufactures and sells pumps, pipe, sumps, fittings, vapor recovery components, electronic controls, monitoring devices and related parts and equipment for use in submersible fueling system applications.
Receive News & Ratings for Eaton Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Eaton and related companies with MarketBeat.com's FREE daily email newsletter.