Eaton (ETN) Beats Q2 Earnings Estimates, Ups 2022 EPS View

Eaton Corporation ETN has reported second-quarter 2022 earnings of $1.87 per share, which surpassed the Zacks Consensus Estimate of $1.82 by 2.8%. Earnings were up 9% year over year. Second-quarter earnings were near the higher end of the company’s guidance of $1.78-$1.88.

GAAP earnings for the reported quarter were $1.50 per share compared with $1.26 in the year-ago period. The difference between GAAP and operating earnings for the reported quarter was due to charges of 24 cents associated with intangible amortization, 2 cents related to a multi-year restructuring program, and 11 cents pertaining to acquisitions and divestitures.

Revenues

Total quarterly revenues were $5,212 million, marginally lagging the Zacks Consensus Estimate of $5,227 million. Total revenues declined 0.05% from the year-ago quarter.

Revenues gained from an 11% increase in organic sales and acquisitions added 2%. These positives were offset by an 11% decline from divestitures and a 2% decrease from a negative currency translation.

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC price-consensus-eps-surprise-chart | Eaton Corporation, PLC Quote

Segmental Details

Electrical Americas’ total second-quarter sales were $2,131 million, up 15% from the year-ago level. The improvement was due to increased organic sales, marginally offset by a negative currency translation. Operating profits were $495 million, up 26% year over year.

Electrical Global’s total sales were $1,495 million, up 5% from the year-ago quarter. Organic sales were up 12% from the year-ago quarter, offset by a negative currency translation of 7%. Operating profits were $282 million, up 9% year over year.

Aerospace’s total sales were $742 million, up 19% from the year-ago quarter. This was due to improved organic sales and contributions from the acquisition of Mission Systems, marginally offset by a negative currency translation. Operating profits were $163 million, up 24% year over year.

Vehicle total sales were $708 million, up 5% from the year-ago quarter due to an increase in organic sales, partially offset by negative currency translation. Operating profits were $108 million, down 11% year over year.

The eMobility segment’s total sales were $136 million, up 55% year over year due to an improvement in organic sales and the acquisition of Royal Power Solutions, offset marginally by a negative currency translation.

Highlights of the Release

Selling and administrative expenses were $828 million, down 5.5% from the year-ago quarter.

ETN’s second-quarter research and development expenses were $168 million, up 9.1% from the prior-year period. Interest expenses for the quarter were $31 million, down 16.2% from the year-ago period.

Eaton’s Electrical segment backlog was up 74% and rolling 12-month orders increased 25%, while Aerospace backlog was up 12%, with rolling 12-month orders rising 19%, all on an organic basis.

Financial Update

Eaton’s cash was $364 million as of Jun 30, 2022, compared with $297 million as of Dec 31, 2021.

As of Jun 30, 2022, the company’s long-term debt was $6,277 million, down from $6,831 million as of Dec 31, 2021.

Guidance

Eaton’s third-quarter 2022 earnings are expected to be $1.95-$2.05 per share. ETN expects organic revenue growth of 13-15% for the third quarter.

Eaton has raised the 2022 earnings per share guidance to $7.36-$7.76 from the previously mentioned $7.32-$7.72 based on strong organic growth. ETN expects organic revenue growth of 11-13% for 2022. The segmental operating margin for 2022 is expected to be 20-20.4%.

Eaton is targeting a share buyback of $200-$300 million for 2022.

Zacks Rank

Currently, Eaton has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

A.O. Smith Corporation AOS came up with second-quarter 2022 earnings of 82 cents per share, which beat the Zacks Consensus Estimate of 81 cents by 1.2%.

A.O. Smith’s long-term (three to five years) earnings growth is pegged at 9%. The Zacks Consensus Estimate for AOS’ 2022 earnings per share indicates 17.9% year-over-year growth.

AZZ Inc. AZZ reported first-quarter fiscal 2023 earnings of $1.40 per share, which beat the Zacks Consensus Estimate of $1.03 by 35.9%.

AZZ reported an average earnings surprise of 20.7% in the last four quarters. The Zacks Consensus Estimate for AZZ’s fiscal 2023 earnings per share indicates 14.7% year-over-year growth.

Regal Rexnord Corporation RRX came up with second-quarter 2022 earnings of $2.76 per share, which beat the Regal Rexnord Zacks Consensus Estimate of $2.62 by 5.3%.

Regal Rexnord’s long-term earnings growth is pegged at 10%. The Zacks Consensus Estimate for RRX’s 2022 earnings per share indicates 12.2% year-over-year growth.

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