Breaking down Eaton PLC (NYSE:ETN) volatility slide

It seems Eaton PLC will continue to recover much faster as its share price surged up 3.80% today. The company's current daily volatility is 2.47 percent, with a beta of 1.22 and an alpha of 0.08 over DOW. As many investors are getting excited about climate change, it is fair to outline Eaton PLC. We will analyze why it could be a much better year for Eaton PLC shareholders.
Published over a year ago
View all stories for Eaton PLC | View All Stories
Macroaxis uses a strict editorial review process to publish stories and blog posts. Our publishers support our company and may receive a small commission when the partner links or references are utilized. Commissions do not affect the opinions or evaluations of our editorial team. The information our editors and media partners deliver is confidential and licensed for your sole use as a Macroaxis user. We reserve all rights to the content of this article, and therefore copying or distributing this story in whole or in part is strictly prohibited.

Reviewed by Ellen Johnson

Eaton PLC has roughly 419 M in cash with 3.22 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 1.05. The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Eaton PLC has an asset utilization ratio of 67.33 percent. This suggests that the company is making $0.67 for each dollar of assets. An increasing asset utilization means that Eaton PLC is more efficient with each dollar of assets it utilizes for everyday operations.
Investing in Eaton PLC, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Eaton PLC along with other instruments in the same portfolio. Using conventional technical analysis and fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of Eaton PLC's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Eaton PLC. Your research has to be compared to or analyzed against Eaton PLC's peers to derive any actionable benefits. When done correctly, Eaton PLC's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Eaton PLC.

How important is Eaton PLC's Liquidity

Eaton PLC financial leverage refers to using borrowed capital as a funding source to finance Eaton PLC ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Eaton PLC financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Eaton PLC's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Eaton PLC's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Eaton PLC's total debt and its cash.

Eaton PLC Correlation with Peers

Investors in Eaton can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Eaton PLC. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Eaton PLC and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Eaton is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with your current brokerage. Please check volatility of Eaton for more details

Detailed Perspective On Eaton PLC

Eaton PLC appears to be very steady, given 1 month investment horizon. Eaton PLC secures Sharpe Ratio (or Efficiency) of 0.11, which denotes the company had 0.11% of return per unit of risk over the last month. Our standpoint towards predicting the volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-eight technical indicators for Eaton PLC, which you can use to evaluate future volatility of the firm. Please utilize Eaton PLC Downside Deviation of 2.64, coefficient of variation of 869.34, and Mean Deviation of 1.86 to check if our risk estimates are consistent with your expectations.
Click cells to compare fundamentals   Check Volatility   Backtest Portfolio

Our take on today Eaton PLC thrive

Expected Short fall just dropped to -1.88, may entail upcoming price depreciation. Eaton PLC currently demonstrates below-verage downside deviation. It has Information Ratio of 0.05 and Jensen Alpha of 0.08. However, we do advice investors to further question Eaton PLC expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Takeaway on Eaton PLC Investment

Whereas some firms under the specialty industrial machinery industry are still a bit expensive, Eaton PLC may offer a potential longer-term growth to institutional investors. To conclude, as of the 29th of July 2020, our research shows that Eaton PLC is a rather very steady investment opportunity with a below average chance of financial distress in the next two years. From a slightly different view, the entity currently appears to be overvalued. Our present 30 days buy-hold-sell recommendation on the company is Strong Hold.

Building efficient market-beating portfolios requires time, education, and a lot of computing power!

The Portfolio Architect is an AI-driven system that provides multiple benefits to our users by leveraging cutting-edge machine learning algorithms, statistical analysis, and predictive modeling to automate the process of asset selection and portfolio construction, saving time and reducing human error for individual and institutional investors.

Try AI Portfolio Architect

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Eaton PLC. Please refer to our Terms of Use for any information regarding our disclosure principles.

Would you like to provide feedback on the content of this article?

You can get in touch with us directly or send us a quick note via email to editors@macroaxis.com