Eaton posts record revenue on data center boom, boosts 2026 profit outlook

Eaton Corporation posted record third quarter revenue of $8.95 billion on Tuesday, a 28 percent increase over the same period last year. This figure surpassed the LSEG consensus estimate of $8.51 billion. Adjusted earnings per share climbed 20 percent to $3.68, beating the expected $3.54. The stock rose nearly 7 percent in afternoon trading to $391, though it remains below its August high of approximately $460.

Management attributed the performance to surging demand for artificial intelligence infrastructure. Data center revenues grew by 65 percent during the quarter. Eaton credited this increase to expanded manufacturing capacity and the integration of Boyd Thermal. The company closed its $9.5 billion acquisition of Boyd Thermal in March, adding advanced liquid-cooling technology to its portfolio.

CEO Paulo Ruiz said the acquisition is already yielding results. Boyd Thermal generated nearly triple-digit year-over-year growth in its second full quarter under Eaton ownership. Consequently, Eaton raised its full-year revenue outlook for the Boyd business to $1.9 billion, an increase of $100 million. Ruiz described Boyd as a key accelerator for the Electrical Global segment.

Core electrical segments also showed strong momentum. The combined Electrical Americas and Electrical Global units achieved 24 percent organic growth and 34 percent total growth in the third quarter. Operating margins for these segments expanded by 1.9 percentage points to 26.4 percent. Order growth accelerated to 43 percent on a rolling 12-month basis. The company's backlog increased 46 percent to over $20 billion, indicating that orders are being received faster than they can be delivered.

Eaton raised its full year 2026 guidance, projecting organic growth of 13 percent to 15 percent. This is up from the previous range of 11 percent to 13 percent. The adjusted EPS forecast increased to a range of $13.70 to $13.80, exceeding the LSEG estimate of $13.61. For the fourth quarter, the company expects organic growth of 13 percent to 15 percent and adjusted EPS of $4.05 to $4.15.

The Aerospace segment missed revenue estimates for the second consecutive quarter, though operating profit still surpassed consensus due to stronger margins. Eaton plans to divest its Mobility unit in early 2027 through a Reverse Morris Trust transaction. Data centers, distributed IT, and commercial aerospace currently represent about one-third of sales, a proportion expected to rise after the separation.