Conviction / Power and Physical Layer
ETN
Eaton Corporation
conviction · held at 5.3%
Eaton makes the electrical gear that gets power from the grid into the servers, and its data center revenue grew 65% last quarter while orders rose 41% and it raised its profit forecast. The shares are at a record high and priced accordingly, so the risk is no longer whether demand shows up but whether estimates keep rising.
What we judge
The view on expected return from here, 0 to 100.
Whether the thesis could succeed without this company at all. This moves slowly, and only when the company's position genuinely changes.
What we measure
Facts from market data, not judgments.
| Price | $449.38 |
| 30-day move | +13.6% |
| Position in 52-week range | 98 |
| From the 52-week high | -0.6% |
| Average daily volume | $1.1B |
| Weight in the book | 5.3% |
| Since last rebalance | +12.3% |
Why it is in the fund
Thesis
Power management and electrical infrastructure supplier critical for building and operating AI-scale data centers.
Standing judgment
Effectively at the 52-week high at roughly 29.7x forward and 29.8x EV/EBITDA, the most expensive name in the power bucket. UBS downgraded to Neutral modelling 2026-27 EPS 3-4% below consensus, which is the specific bear case: a stock that runs on upward revisions when revisions stop.
What changed, and why
Every move in this number carries the reason it moved. A score does not change without new evidence.
| Date | Conviction | Change | Cause | Evidence |
|---|---|---|---|---|
| 2026-08-05 | 86 | +7 | A record quarter with data center revenue up 65% and a raised full year guide confirms the electrical bottleneck outright, but the stock sits at its all time high on the richest multiple in the power bucket. | Q2 2026 reported 2026-07-31: sales $8.5B (+21% y/y, +14% organic) above the high end of guidance, segment margin 23.1%, adjusted EPS $3.15. FY26 organic growth guidance raised to 11-13% and adjusted EPS to $13.40-$13.60. Trailing twelve month orders up 41% in Electrical Americas, backlog up 43% in E |
| 2026-08-05 | 79 | flat | first v3 judgment (v2 score was uninformative, see L-001): Order and backlog acceleration is widening rather than fading, and the electrical equipment socket is the least substitutable part of the physical layer, which justifies staying long into a full multiple. | Q2 2026 (Jul 30): revenue $8.5B +21% y/y, 14% organic; adjusted EPS $3.15, a Q2 record; data center organic revenue +65%; Electrical Americas orders +41% and backlog +33%, Electrical Global orders +33% and backlog +103%; FY26 organic growth guidance raised 200bps to 12% and adjusted EPS midpoint rai |
| 2026-08-05 | 79 | -13 | first v3 judgment (v2 score was uninformative, see L-001): Order and backlog acceleration is widening rather than fading, and the electrical equipment socket is the least substitutable part of the physical layer, which justifies staying long into a full multiple. | Q2 2026 (Jul 30): revenue $8.5B +21% y/y, 14% organic; adjusted EPS $3.15, a Q2 record; data center organic revenue +65%; Electrical Americas orders +41% and backlog +33%, Electrical Global orders +33% and backlog +103%; FY26 organic growth guidance raised 200bps to 12% and adjusted EPS midpoint rai |
| 2026-07-31 | 92 | +6 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-30 | 86 | -4 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-29 | 90 | +1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-28 | 89 | +1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-27 | 88 | +5 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-26 | 83 | -3 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-25 | 86 | -2 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-24 | 88 | -6 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-23 | 94 | +10 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-22 | 84 | -7 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-21 | 91 | +5 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-20 | 86 | -2 | migrated from v2 (cause not recorded) | v2 `scores` row |