Eaton surges 5.4% as company expands credit facility to $4 billion
Power management giant boosts borrowing capacity by 33% following record quarterly results and strong 2026 outlook
Eaton Corporation shares jumped 5.4% on Friday as the power management company increased its revolving credit facility by one-third to $4 billion, bolstering its financial flexibility following record fourth-quarter results and an optimistic outlook for 2026.
The Dublin-based industrial conglomerate expanded its borrowing capacity from $3 billion to $4 billion through a commitment increase agreement, according to a regulatory filing. The facility was originally established in September 2025, replacing a previous $2.5 billion revolving credit arrangement and including provisions allowing for increases up to $4 billion in aggregate commitments.
The expansion of liquidity comes at a pivotal moment for Eaton, which reported record sales of $7.1 billion in the fourth quarter of 2025, a 13% increase from the prior year. The company generated record operating cash flow of $2.0 billion and free cash flow of $1.6 billion during the quarter, demonstrating robust cash generation capabilities even as it invests heavily in capacity expansion.
Eaton's strategic position in secular growth markets has strengthened considerably. Orders from data center customers accelerated approximately 200% in the fourth quarter compared with the same period in 2024, reflecting surging demand driven by artificial intelligence infrastructure build-outs. The company's Electrical Americas segment, which accounted for much of this momentum, is projected to deliver 10% growth in 2026 at the midpoint, outpacing overall company expectations.
Chief Executive Officer Paulo Ruiz highlighted the company's momentum in comments accompanying the earnings release, noting that "the growing and diversified backlog provides extended visibility, enabling predictable financial performance and disciplined capital planning for 2026." The company reported backlog growth of 29% in its Electrical sector and 16% in Aerospace.
For full year 2026, Eaton forecast organic growth of 7-9% and adjusted earnings per share of $13.00 to $13.50, representing a 10% increase at the midpoint from 2025 levels. Segment margins are projected to reach 24.6-25.0%, continuing the company's trajectory of margin expansion achieved through operational efficiency and favorable product mix.
The enhanced credit facility provides Eaton with additional flexibility to pursue strategic initiatives, including potential acquisitions and capacity investments to meet accelerating demand. The company has been actively expanding its manufacturing capabilities, particularly in electrical equipment and aerospace components, to support the electrification trend and recovery in commercial aviation.
Analysts have maintained a broadly positive view on the stock, with 22 of 30 analysts covering Eaton rating it as a buy or strong buy, according to market data. The consensus target price of $402.04 suggests roughly 7.5% upside from current levels near $374.
The rally in Eaton shares extends the stock's strong performance over the past year, with shares now trading near their 52-week high of $397.32. The company's market capitalization stands at approximately $142 billion, reflecting investor confidence in its positioning within structural growth themes including electrification, digitalization, and infrastructure modernization.
Eaton's balance sheet strength, evidenced by its record cash generation and expanded credit access, positions the company to capitalize on what management identifies as major opportunities in reindustrialization and infrastructure spending. The company remains on track to meet its long-term 2030 financial targets while delivering shareholder returns through a combination of growth and disciplined capital allocation.