Eaton Posts Record Earnings, but Revenues Miss

Multinational power management company Eaton (ETN) has reported mixed financial results for the third quarter of 2021 as earnings beat estimates but sales missed.

The company provides electrical and industrial components, wiring devices, residential, fire detection, lighting products. It also designs and manufactures power train systems and other components for commercial vehicle markets.

Adjusted earnings per share (EPS) increased 30% year-over-year to an all-time high of $1.75, beating the Street’s estimate of $1.73.

However, sales, which grew 9% to $4.9 billion, fell marginally short of analysts’ expectations of $5.02 billion.

Sales for the Electrical Americas segment climbed 9% year-over-year to $1.9 billion, driven by robust order activity, particularly in the residential and data center markets.

The Electrical Global segment’s sales rose 19% to $1.4 billion; and sales of the Aerospace segment jumped 38% to $745 million, as a result of strength in the business jet market.

The Vehicle segment’s sales totaled $640 million, reflecting a year-over-year increase of 12%, and eMobility segment sales went up 6% to $84 million. (See Insiders’ Hot Stocks on TipRanks)

Chairman and CEO of Eaton, Craig Arnold, said, “We had a record third quarter, driven by strong operational performance despite supply constraints that impacted our organic sales growth. Still, we saw encouraging signs, including robust order growth of 17% on a rolling 12-month basis and record backlogs up more than 50% in our combined Electrical Americas and Electrical Global segments.

“Our segment margins in the third quarter were 19.9%, an all-time record and above the high end of our guidance. This represents a 230-basis point improvement over the third quarter of 2020.”

The company expects adjusted EPS to range from $1.68 to $1.78 in the fourth quarter. Moreover, for 2021, it projects organic growth of 9%-11%, down from the earlier estimate of 11%-13%.

Overall, the stock has a Moderate Buy consensus rating based on 10 Buys and five Holds. The average Eaton price target of $173.93 implies 2.3% upside potential. Shares have gained 51% over the past year.

TipRanks data shows that financial blogger opinions are 75% Bullish on the stock, compared to the sector average of 67%.

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