Eaton Corp. Earnings Cheat Sheet: Fifth Straight Quarter of Double-Digit Growth

S&P 500 (NYSE:SPY) component Eaton Corporation (NYSE:ETN) reported its results for the third quarter. Eaton is a power management company offering services in the sectors of electricity, hydraulics, aerospace, truck, and automotive.

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Eaton Earnings Cheat Sheet for the Third Quarter

Results: Net income for the industrial electrical equipment company rose to $365 million ($1.07 per share) vs. $268 million (79 cents per share) in the same quarter a year earlier. This marks a rise of 36.2% from the year earlier quarter.

Revenue: Rose 15.5% to $4.12 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: ETN reported adjusted net income of $1.08 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.09 per share. Analysts were expecting revenue of $4.2 billion.

Quoting Management: Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our record third quarter results were at the midpoint of our guidance range, which we had increased in our July earnings release. This achievement is despite our incurring $0.06 per share of non cash mark-to-market losses on commodity hedge contracts resulting from the virtually unprecedented declines in metals prices which occurred during the last two weeks of September. We also achieved record operating margins and very strong cash flow in the third quarter, demonstrating that our business is continuing to perform well despite the uncertainty affecting the world economy and a number of our end markets.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 18.8%, with the biggest boost coming in the first quarter when revenue rose 22.6% from the year earlier quarter.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 48.7% and in the first quarter, the figure rose 85.2%.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 2 cents, and in the first quarter, it was ahead by 4 cents.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from $1.09 a share to $1.11 over the last ninety days. For the fiscal year, the average estimate has moved up from $3.93 a share to $3.99 over the last ninety days.

Competitors to Watch: Parker-Hannifin Corp. (NYSE:PH), Magnetek, Inc. (NYSE:MAG), Tech/Ops Sevcon, Inc. (NASDAQ:TO), United Technologies Corp. (NYSE:UTX), General Electric Company (NYSE:GE), Sauer-Danfoss Inc. (NYSE:SHS), Dover Corporation (NYSE:DOV), Thomas & Betts Corporation (NYSE:TNB), Roper Industries, Inc. (NYSE:ROP), and Crane Co. (NYSE:CR).

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(Source: Xignite Financials)

 

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