全球资本货物：轮换时代的大西洋巨头——施耐德与伊顿（第二部分）

InvestorsarequestioningUseconomicleadershipandvaluations,butdoesarotationmakesense in capital goods? In the Titans series, we take two similar businesses and comparethemlinebylinetoassesscompetitiveadvantagesandweaknesses.Inthisparttwowecompare Eaton and Schneider's portfolios, future growth, returns and valuations.Schneider is a pure play electrical and automation name, Eaton is a diversifiedindustrial conglomerate. With ~80% of sales exposed to electrification and ~20%to industrial automation, Schneider has a much narrower focus than Eaton, which hasadditional exposure to aerospace (15%) and autos (14%). Geographically Eaton has 2x theexposure to North America, Schneider 2x the exposure to Row (ex-Europe).Electrical portfolios have many similarities, but some key differences. Eatonsells more through systems whilst Schneider has a greater software and solutionsoffering through its EcoStruxure loT platform. At the product level, transformers is a keydifferentiation for Eaton, accounting for as much as HSD share of its portfolio. We estimatemedium voltage sales represent ~35% of the portfolio at Eaton vs 20% at Schneider, dueto higher grid and lower resi exposure. In data centers, Eaton is more concentrated onthe grey space and UPS, whilst Schneider has a broader exposure to the white space andthermal m@agement, now offering liquid cooling through Motivair. Eaton's grid exposure isrger and more hardware-focused, vs a software-led strategy at Schneider.own estimates see roughly similar growth at both names (8.2% vs 8.1% organic growthfor Schneider and Eaton respectively) over the next 5 years. We expect greater marginexpansionatEatonhowever(6Obpsp.a.vs4Obpsp.a.atSchneider),reachinga27.1%segment operating margin by 2029 vs 20.7% adj. EBITA margin at Schneider. Structuralcost takeout is a key incremental driver at Eaton, whilst Schneider should benefit fromrecovery potential (IA + software) and mix improvement (portfolio high-grading).Consensus expects mean reversion in topline growth and margin expansion. Havingidentified Schneider as growing its topline faster and Eaton as expanding its margin moreand Schneider's margin target fully baked into consensus but not Eaton's margins target orSchneider's growth target.TSR to be higher at Eaton. With similar growth but greater margin expansion and higherbuybacks,weexpectEatontodrivea~15%EPSCAGRvs~14%forSchneider.Higherdividends at Schneider adds a further 2.4% to TSR to reach 16.6%, but this remains belowEaton's total forecast TSR of 17.1% once we add in the 2% dividend yield that we see.Valuation premium at Eaton difficult to explain. Eaton has traded at a higher multiplethan Eaton since 2022, but we find this gap is only partly explained by geographicdifferences (higher US market multiples) and higher growth expectations with 1/3 ofSchneider's ~20% discount unexplained by technical or fundamental factors.www.bernsteinresearch.com BERNSTEIN TICKER TABLETickerRatingSU.FP0OLDETN0EDMSPXPRICETARGETCHANGE/ESTIMATECHANGEIN BOLDO - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage SuspendedSource: Bloomberg, Bernstein estimates and analysis.INVESTMENTIMPLICATIONSWe rate Schneider Outperform with a target price of 275 (ex-290). We lower our estimates on a weaker USD since the startother regions. We also increase the interest expense for the current year.We maintain our Outperform rating for Eaton (ETN, TP $355). We arrive at Eaton's price target by applying a 25x P/E multipleonour2030EPSestimate.Discountingthisback,wearriveat$355,whichimpliesa30xP/Eonour2025EPSAs微信GLOBALCAPITAL GOODS c 9eBERNSTEIN SOCIETE CENERALE CROUP2 VALUATION COMPS TABLEEXHIBIT 1: Global Electricals Comp SheetPrice/Sales20252026EuropeABB3.2x3.0xLegrand3.2x3.0xSchneider Electric3.2x3.0xSiemens2.2x2.1x2.9xUSEaton5.1x4.7xHubbell3.7x3.5xNvent3.4x3.1xVertiv5.1x4.5xUS average4.3x4.0xEectricals Average3.6x3.4xS&P 5003.2x3.0xMSCI Europe1.6x1.6x*as at 08 Jul’25** company preferred metric*** calculated as 1y2y EPS CAGR on 2025PESource: Bloomberg L.P., Bernstein analysis Table Of ContentsPM Summary.Portfolio - SchneiderPortfolio - EatolHeadtoHead ComparisonsGroupElectricalBusinesDatacenterbusinesGrid BusinessForecastsMacro background.Company Targets.Growth ExpectationsMargin Expectations.Capital Allocation.TotalShareholderReturnExpectationsValuation.Explaining the Discount.SOTP analysis to Extract Electricals Value.Explainingthe Electricals DiscountDETAILSPM SUMMARYInvestors are questioning US economic leadership and valuations, but doesseries, we take two similar businesses and compare them line by line to assess competitive advantages and weaknesses. In thisfirst installment of the series we compare Schneider to Eaton.Whilst in ourfirst notewe did adeep dive intothehistoric growth,margins,andcashflow generationofeach business,assessing which name has had the edge over the past 15 years, here we compare portfolios, future growth and returns in parttwo of this head-to-head. We h