Eaton Corp. Earnings: Four Quarters of Rising Profit Now Broken

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 Corporation Earnings Cheat Sheet

Results: Net income for the machine industrial fell to $345 million ($1.02 per share) vs. $365 million ($1.07 per share) a year earlier. This is a decline of 5.5% from the year-earlier quarter.

Revenue: Fell 4.2% to $3.95 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Eaton Corporation fell short of the mean analyst estimate of $1.09 per share. It fell short of the average revenue estimate of $4.24 billion.

Quoting Management: Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our third quarter results came in very close to our expectations despite the slowdown in economic growth which we discussed in September at several investment conferences. Economic growth in the EU and China remained subdued during the quarter, while industrial activity in the U.S. decelerated during the quarter reflecting uncertainties over fiscal reforms that have led customers to hold back on purchases. As a result, we expect our markets for full year 2012 will show less growth than we had anticipated earlier in the year, with our markets for the year now estimated to grow between one to two percent.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the second quarter, net income rose 13.7% from the year earlier, while the figure increased 8.4% in the first quarter, 29.3% in the fourth quarter of the last fiscal year and 36.2% in the third quarter of the last fiscal year.

The company fell short of forecasts after beating estimates in the previous two quarters. In the second quarter, it topped the mark by 6 cents, and in the first quarter, it was ahead by 2 cents.

Revenue has fallen in the past two quarters. In the second quarter, revenue declined 0.5% to $4.07 billion from the year-earlier quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1.10 per share, down from $1.14 ninety days ago. The average estimate for the fiscal year is now $4.25 per share, down from $4.31 sixty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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