Critical Analysis: Schneider Electric (OTCMKTS:SBGSY) & Eaton (NYSE:ETN)

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

Dividends

Schneider Electric pays an annual dividend of $0.36 per share and has a dividend yield of 0.7%. Eaton pays an annual dividend of $4.16 per share and has a dividend yield of 1.2%. Eaton pays out 41.9% of its earnings in the form of a dividend.

Risk & Volatility

Schneider Electric has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500. Comparatively, Eaton has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.

Earnings & Valuation

This table compares Schneider Electric and Eaton”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Schneider Electric	$41.29 billion	3.58	$4.62 billion	N/A	N/A
Eaton	$25.99 billion	5.35	$3.79 billion	$9.94	35.95

Schneider Electric has higher revenue and earnings than Eaton.

Analyst Recommendations

This is a summary of recent recommendations for Schneider Electric and Eaton, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Schneider Electric	0	3	0	2	2.80
Eaton	0	6	14	0	2.70

Eaton has a consensus target price of $383.6316, suggesting a potential upside of 7.36%. Given Eaton’s higher probable upside, analysts clearly believe Eaton is more favorable than Schneider Electric.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Schneider Electric	N/A	N/A	N/A
Eaton	15.11%	23.91%	11.38%

Insider & Institutional Ownership

0.8% of Schneider Electric shares are owned by institutional investors. Comparatively, 83.0% of Eaton shares are owned by institutional investors. 0.3% of Eaton shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Eaton beats Schneider Electric on 9 of the 15 factors compared between the two stocks.

About Schneider Electric

Schneider Electric S.E. engages in the energy management and industrial automation businesses in the France, Western Europe, North America, the Asia Pacific, Eastern Europe, the Middle East, Africa, South America, and internationally. The company offers busway and cable management products, circuit breakers and switches, contactors and protection relays, electrical car charging, electrical protection and control products, energy management software solutions, load banks, power monitoring and control systems, power quality and power factor correction products, push buttons, switches, pilot lights and joysticks, surge protection and power conditioning services, switchboards and enclosures, and transfer switches. It also provides access control, controllers, expansion modules, servers and HMIs, fire and security products, sensors, valves and valve actuators, and variable speed and frequency drives; energy management and software solutions; feeder automation, grid automation, and SCADA software products; and medium voltage switchgears and transformers, outdoor equipment, substation automation products, and switchgear components. In addition, the company offers critical power and cooling services, data center cooling and software, IT power distribution products, prefabricated data center modules, racks and accessories, security and environmental monitoring, surge protection and power conditioning, and uninterruptible power supply products; and home automation and security, installation materials and systems, light switches, and electrical sockets. Further, the company provides human machine interface, industrial automation software and communication, interface relays, measurement and control relays, measurement and instrumentation products, motion controls and robotics, signaling units, solar and energy storage, power supplies, power protection and transformers, process control and safety, RFID systems, and other industrial automation and control products, as well as PLC, PAC, and dedicated controllers. Schneider Electric S.E.was founded in 1836 and is headquartered in Rueil-Malmaison, France.

About Eaton

Eaton Corporation plc operates as a power management company worldwide. The company’s Electrical Americas and Electrical Global segment provides electrical components, industrial components, power distribution and assemblies, residential products, single and three phase power quality and connectivity products, wiring devices, circuit protection products, utility power distribution products, power reliability equipment, and services, as well as hazardous duty electrical equipment, emergency lighting, fire detection, explosion-proof instrumentation, and structural support systems. Its Aerospace segment offers pumps, motors, hydraulic power units, hoses and fittings, and electro-hydraulic pumps; valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems, and nose wheel steering systems; hose, thermoplastic tubing products, fittings, adapters, couplings, and sealing and ducting products; air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, and adapters and regulators; oxygen generation system, payload carriages, and thermal management products; and wiring connectors and cables, as well as hydraulic and bag filters, strainers and cartridges, and golf grips for manufacturers of commercial and military aircraft, and related after-market customers, as well as industrial applications. The company’s Vehicle segment offers transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, locking and limited slip differentials, transmission controls, and fuel vapor components for the vehicle industry. Its eMobility segment provides voltage inverters, converters, fuses, circuit protection units, vehicle controls, power distribution systems, fuel tank isolation valves, and commercial vehicle hybrid systems. Eaton Corporation plc was founded in 1911 and is based in Dublin, Ireland.