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With a market cap of $141.9 billion, Dublin, Ireland-based Eaton Corporation plc (ETN) is a global power management company specializing in electrical, aerospace, vehicle, and eMobility technologies. Its offerings include electrical components, power systems, aerospace solutions, and advanced electric vehicle technologies.
Shares of the power management company have outperformed the broader market over the past 52 weeks. ETN has climbed 57.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.6%. In 2024, shares of ETN are up 48.6%, compared to SPX’s 23.6% gain on a YTD basis.
Looking further, ETN’s outperformance becomes more evident when compared to the Industrial Select Sector SPDR Fund’s (XLI) 31.5% gain over the past 52 weeks and 21.9% return on a YTD basis.
Despite reporting better-than-expected Q3 adjusted EPS of $2.84, shares of Eaton fell 3.3% on Oct. 31 primarily due to its revenue miss, with total revenue of $6.4 billion. The decline in the Vehicle segment’s sales by 7.6% and the 10.6% drop in operating profit in the Electrical Global segment raised concerns. Additionally, broader market pressures, including concerns over the impact of Hurricane Helene and aerospace labor strikes, contributed to negative sentiment. Moreover, increased R&D expenses and higher selling and administrative costs raised concerns about cost management.
For the current fiscal year, ending in December, analysts expect ETN’s EPS to grow 18.3% year-over-year to $10.79. The company’s earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 20 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 12 “Strong Buy” ratings, two “Moderate Buys,” and six Holds.”
This configuration is more bullish than three months ago, with nine “Strong Buy” ratings on the stock.
On Nov. 13, Bank of America raised Eaton's price target to $410 and maintained a “Buy” rating, following discussions with key executives. The firm cited confidence in Eaton's margin improvements and growth potential in the Electrical segment as new capacity becomes operational.
As of writing, ETN is trading below the mean price target of $372. The Street-high price target of $431, implies a potential upside of 20.4% from the current price.
