Company Reports

Narrow-moat-rated Eaton turned in solid first-quarter results on the back of another strong performance in the electrical Americas segment, beating FactSet consensus estimates for revenue and earnings per share. Consolidated revenue grew an organic 8% to $5.9 billion, and adjusted EPS grew 28% to $2.40 per share. Segment operating margin also expanded 340 basis points to 23.1% for the quarter. As a result, management stepped up its full-year consolidated guidance to include organic growth of 7%-9% and an operating margin of 22.8%-23.2%. After revising our outlook for margins and regional share in the electrical segment, we have raised our fair value estimate to $225 per share from $220.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

Narrow-moat-rated Eaton posted another impressive quarter of revenue growth and margin expansion to close out 2023, and the market appeared to be pleased, as the stock rallied over 7% on Feb. 1. Revenue of $6.0 billion and adjusted earnings per share of $2.55 both surprised to the upside relative to FactSet consensus estimates and were slightly above what we had originally baked in. Segment operating margin was up a full 200 basis points to 22.8% for the quarter. Given Eaton’s sustained margin performance and healthy growth outlook, we have raised our fair value estimate to $210 per share from $208.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

Narrow-moat-rated Eaton put forth a solid third-quarter effort. Revenue of $5.88 billion was right in line with our expectations, but segment operating margin of 23.6% materially exceeded what we penciled in. These results, coupled with the company's higher guidance, prompted us to lift our midcycle operating margin estimate by 50 basis points. Eaton’s margin progression is so far ahead of its 2025 target that the goal now looks laughably low. We think high-single-digit long-term revenue growth driven by infrastructure-related spending and the aerospace recovery should translate to strong operating leverage. Even modest operating leverage means Eaton should hit close to a 23% operating margin by 2025. These changes caused us to raise our fair value estimate to $206 per share from $195.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

Narrow-moat-rated Eaton once again had a great quarter. We lift our fair value estimate to $195 from $176. Most of the increase is due to management’s revised 2023 earnings outlook (which we mostly agree with), with the incremental benefits coming nearly evenly from both our updated long-term targets and time value of money. Consolidated revenue rose to $5.87 billion, or 13% organically, while segment operating margins increased 150 basis points to 21.5%, during the quarter.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

After reviewing narrow-moat-rated Eaton’s first-quarter results, we've lifted our fair value estimate by 7% to $176 per share. The company is performing exceptionally well, pacing ahead of our expectations and its own medium-term targets. Even after revising our estimates, we think there’s some noticeable conservatism in parts of management’s guidance (though there’s also some optimism, like operating margin aspirations for the eMobility segment, which rarely seems to consistently break even).

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from the early innings of an energy supercycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

After reviewing narrow-moat-rated Eaton’s latest results and rolling our model, we lift our fair value estimate by over 6% to $164. While results were very much in line with expectations, Eaton’s guidance came out ahead of what we earmarked. Time value of money also made up a small portion of the raise. Eaton is tracking ahead of its 2025 targets, and we’re encouraged by management’s commentary on the call regarding its long-term secular growth drivers, despite market-related fears of a recession.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from the early innings of an energy super cycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its legacy industrial sector and its electrical sector.

After reviewing narrow-moat-rated Eaton’s third-quarter results, we see no reason to change our $154 fair value estimate. Revenue increased 8% on a reported basis to $5.3 billion, or 15% on an organic basis, fairly balanced between price and volume. Except for aerospace, which we were disappointed by, all of Eaton’s five remaining operating segments saw double-digit increases in organic top-line growth. Sales came in line-ball accurate with our expectations, though vehicle outperformed and made up the shortfall from aerospace.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from the early innings of an energy super cycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its more legacy industrial sector and its electrical sector.

We see no reason to change our $154 fair value estimate for narrow-moat-rated Eaton following the firm's second-quarter results. There were puts and takes in the report as both Eaton’s top and bottom lines trailed below our prior expectations, even as we nearly pegged segment operating margins of 20.1% during the quarter (we were off by 10 basis points to the upside). That said, management raised its full-year adjusted EPS guide by 4 cents to $7.56 at the midpoint. For the future, we model at the midpoint of adjusted EPS guidance, which represents a slight 2 cent decrease from our prior expectations.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from the early innings of an energy super cycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its more legacy industrial sector and its electrical sector.

Narrow moat rated Eaton turned in a solid first-quarter performance, but nothing in its latest results materially alters our long-term view of the firm. We made some modest adjustments to our near-term forecast, but the benefits of additional sales were mostly offset by slightly higher restructuring in operating margins than we were previously modeling. That said, we left our midcycle, non-GAAP segment operating margins intact. In summation, we raise our fair value estimate to $154 per share from $150 previously, but most of the raise was due to time value of money.

Eaton is a mission-critical manufacturer of highly engineered products and services. These offerings are designed to solve customer pain points in vital portions of the world’s infrastructure. We believe Eaton has successfully repositioned its portfolio to fully benefit from the early innings of an energy super cycle and capture secular trends like the global energy transition, digitization, and electrification. Eaton’s portfolio can be divided into two portions: its more legacy industrial sector and its electrical sector.