Eaton Corporation $ETN ETN has announced an agreement with Dana Incorporated to combine its Mobility Group with Dana through a Reverse Morris Trust (RMT) transaction. This will aid Eaton in its ongoing portfolio transformation and support its 2030 growth strategy. The transaction will create a combined company valued at more than $10 billion and further streamline Eaton’s business portfolio.
The move strengthens Eaton’s focus on its higher-growth, higher-margin Electrical and Aerospace segments. The company’s long-term strategy is centered on benefiting from major secular growth drivers, including electrification, digitalization, AI-powered data center expansion, infrastructure modernization, aerospace aftermarket demand and increased defense spending. Over the years, Eaton has steadily reduced its reliance on cyclical automotive markets and shifted toward intelligent power management and electrical solutions, resulting in stronger margins, improved recurring revenue visibility and enhanced cash flow generation.
The Dana transaction represents another milestone in Eaton’s portfolio optimization efforts. By combining its Mobility business with Dana, Eaton separates a mature automotive operation while retaining exposure to vehicle electrification opportunities through ownership and strategic participation in the new entity. Eaton’s Mobility Group is valued at approximately $5.1 billion, while the combined company is expected to generate about $11 billion in pro forma revenues and $1.7 billion in adjusted EBITDA in 2026.
Per the agreement, Eaton will receive approximately $1.1 billion in cash, and its shareholders will own at least 50.1% of the combined company. The deal is also expected to generate around $250 million in annual run-rate synergies. Expected to close in the first quarter of 2027, the transaction should immediately enhance Eaton’s organic growth profile and operating margins.
Overall, the deal reinforces Eaton’s transformation into a more focused electrification and power management leader positioned to capitalize on long-term infrastructure and energy transition trends.
What About ETN’s Peers?
Emerson Electric $EMR EMR continues to strengthen its market presence, customer base, and product portfolio through strategic acquisitions. These deals have enabled Emerson to enhance its automation capabilities and enter new markets. At the same time, Emerson is divesting non-core and underperforming businesses, which enables it to focus resources more effectively on its core operations.
Powel Industries POWL is benefiting from global electrification and digitalization trends. Powel’s expanding presence across the electrical power value chain has driven strong bookings from utility and industrial markets. Additionally, Powel’s acquisition of Remsdaq strengthens its automation capabilities, enabling it to deliver more comprehensive electrical automation solutions to utility customers.
ETN Price Performance
Shares of Eaton have gained 28.7% year to date, outperforming the industry.
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ETN’s Expensive Valuation
Eaton’s shares are trading at a premium compared with its industry. The company’s forward 12-month price to earnings of 28.3X is higher than its industry’s 24.65X and above the median of 26.41X over the last three years.
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No Estimate Movement for ETN
The Zacks Consensus Estimate for ETN’s second-quarter and third-quarter 2026 EPS has witnessed no movement over the past seven days. The same holds true for 2026 and 2027 EPS estimates.
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The consensus estimates for ETN’s 2026 and 2027 revenues and earnings indicate year-over-year increases.
ETN stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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