Eaton (ETN) Hits 52-Week High: What’s Driving the Stock?

Eaton Corporation plc ETN touched a new 52-week high of $193.9 on Jun 13. The stock closed the trading session at $193.86, up 2.27% from the previous day’s $189.55. The company’s ongoing expansion of eMobility business in Europe continues to boost its share price.

ETN has gained 23.5% year to date compared with the Zacks Manufacturing-Electronics industry’s growth of 8.3%. The Zacks Industrial Products sector grew 6.2% during the same time frame. The Zacks S&P 500 Composite increased 14.8%.

Eaton currently carries a Zacks Rank #2 (Buy). It has been benefiting from strategic acquisitions, restructuring actions, research and development (R&D) programs, and product innovation.

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What’s Driving Eaton’s Outperformance?

The company has been recording solid earnings and revenue growth over the past few quarters. In the first quarter of 2023, it recorded earnings of $1.88 per share, which surpassed the Zacks Consensus Estimate by 5.6%. The bottom line also increased 16% year over year.

Revenues totaled $5,483 million in the same quarter, which outpaced the Zacks Consensus Estimate of $5,233 million by 4.8%. The top line improved 13.2% from the year-ago period’s level.

Eaton has been investing consistently in R&D programs to introduce new products, including power management solutions that will help reduce energy consumption and carbon emissions. The company has laid out a 10-year plan that includes $3 billion investment in R&D programs.

ETN invested $665 million in R&D programs in 2022, up 8% year over year. In the first quarter of 2023, the company invested $179 million in R&D activities, up 8.5% from that recorded in the year-ago period.

Eaton won a large follow-on order for the U.S. network of electric vehicle (EV) charging stations with 150 sites. The company’s expertise can help it grab a larger market share in the fast-expanding EV charging business in the United States.

Courtesy of ongoing improvement in the end-market conditions, ETN increased its organic growth guidance from 7-9% to 9-11% for 2023. It also raised its guided range for adjusted earnings per share to $8.30-$8.50 from $8.04-$8.44. Capital expenditure is anticipated to be $700 million, up from the previously projected $630 million.

Other Stocks to Consider

Some other top-ranked stocks from the same industry are Emerson Electric Co. EMR, ABB ABBNY and Franklin Electric Co. FELE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EMR’s long-term earnings growth rate is 9.1%. It delivered an average earnings surprise of 4.52% in the last four quarters.

ABBNY’s long-term earnings growth rate is 6.2%. The Zacks Consensus Estimate for 2023 earnings is pinned at $1.68 per share, indicating year-over-year growth of 27.3%.

FELE’s long-term earnings growth rate is 12%. The Zacks Consensus Estimate for 2023 earnings is pegged at $4.35 per share, implying year-over-year improvement of 8.8%.

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