nVent Electric (NYSE:NVT) versus Eaton (NYSE:ETN) Financial Contrast

Eaton (NYSE:ETN) and nVent Electric (NYSE:NVT) are both large-cap industrials companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, analyst recommendations, earnings and valuation.

Volatility and Risk

Eaton has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, nVent Electric has a beta of 1.39, suggesting that its share price is 39% more volatile than the S&P 500.

Profitability

This table compares Eaton and nVent Electric’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eaton	12.18%	25.09%	9.62%
nVent Electric	12.84%	20.82%	11.20%

Dividends

Eaton pays an annual dividend of $4.40 per share and has a dividend yield of 1.3%. nVent Electric pays an annual dividend of $0.84 per share and has a dividend yield of 0.8%. Eaton pays out 44.0% of its earnings in the form of a dividend. nVent Electric pays out 20.2% 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. nVent Electric has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Eaton and nVent Electric, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eaton	0	2	20	1	2.96
nVent Electric	0	2	15	3	3.05

Eaton presently has a consensus price target of $482.09, suggesting a potential upside of 37.46%. nVent Electric has a consensus price target of $197.82, suggesting a potential upside of 77.53%. Given nVent Electric’s stronger consensus rating and higher probable upside, analysts clearly believe nVent Electric is more favorable than Eaton.

Valuation & Earnings

This table compares Eaton and nVent Electric”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eaton	$27.45 billion	4.96	$4.09 billion	$10.01	35.04
nVent Electric	$3.89 billion	4.63	$710.20 million	$4.15	26.85

Eaton has higher revenue and earnings than nVent Electric. nVent Electric is trading at a lower price-to-earnings ratio than Eaton, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

83.0% of Eaton shares are held by institutional investors. Comparatively, 90.0% of nVent Electric shares are held by institutional investors. 0.1% of Eaton shares are held by insiders. Comparatively, 1.7% of nVent Electric shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

nVent Electric beats Eaton on 10 of the 18 factors compared between the two stocks.

About Eaton

Eaton is a global power management company that designs and manufactures products and services intended to help customers manage electrical, hydraulic and mechanical power. Founded in 1911, the company serves customers across a range of industries, including utilities, commercial buildings, data centers, aerospace and transportation. Its offerings include electrical distribution and circuit protection equipment, power quality and backup systems, and power management software and services. Eaton also makes aerospace components and systems, as well as products for vehicle powertrains and related applications.

About nVent Electric

nVent Electric plc designs and manufactures products and solutions that protect and connect electrical systems. Its offerings include electrical enclosures, cable management and fastening products, grounding and bonding solutions, and systems for managing heat in electrical and industrial applications. The company serves customers across industries such as data centers, energy, infrastructure, commercial construction and manufacturing. Its products are marketed under brands including Hoffman, ERICO, CADDY, Raychem and Schroff, and it serves customers in markets around the world. nVent became an independent, publicly traded company in 2018 after its separation from Pentair.