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Eaton Corporation plc’s (ETN - Free Report) first-quarter 2017 operating earnings per share of 96 cents beat the Zacks Consensus Estimate of 87 cents by 10.3%.
The reported earnings exceeded management’s guidance range of 80–90 cents per share. The bottom line was up 9.1% from the year-ago quarter level.
Revenues
In the quarter under review, Eaton’s total revenue came in at $4.85 billion, which surpassed the Zacks Consensus Estimate of $4.69 billion by 3.4%. Total revenue was 1% higher than the year-ago level.
The year-over-year sales increase consists of 2% growth in organic sales, partially offset by a 1% decline from negative currency translation.
Total revenue improved primarily due to a higher contribution from its Electric Products and Hydraulics segments, offset marginally by lower contribution from Vehicle, Aerospace, and Electrical Systems and Services (2.6%) segments.
Eaton Corporation, PLC Price, Consensus and EPS Surprise
Cost of products sold in the reported quarter was $3,310 million, up 0.6% from the prior-year period.
Selling and administrative expenses decreased 0.8% to $885 million from $892 million a year ago.
In the first quarter of 2017, the company’s research and development expenses were $143 million, down 4.0% from $149 million in the prior-year quarter.
Interest expenses of $61 million were up 7.0% from the prior-year quarter figure.
Financial Update
Eaton’s cash and short-term investments were $222 million as of Mar 31, 2017, compared with $543 million as of Dec 31, 2016.
As of Mar 31, 2017, long-term debt was $6,677 million compared with $6,711 million as of Dec 31, 2016.
Guidance
Second-quarter 2017 earnings per share are expected to be between $1.05 and $1.15.
Thanks to its solid first-quarter performance, Eaton now expects 2017 operating earnings in the range of $4.45–$4.75 per share, up from the prior guidance of $4.30–$4.60 per share.
A Peer Release
ABB Ltd reported first-quarter 2017 earnings of 28 cents per share, beating the Zacks Consensus Estimate of 26 cents by 7.7%.
Upcoming Releases
CUI Global Inc. is slated to report first-quarter 2017 earnings on May 10. The Zacks Consensus Estimate is pegged at a loss of 4 cents.
SPX FLOW Inc. (FLOW - Free Report) is slated to report first-quarter earnings on May 3. The Zacks Consensus Estimate is pegged at 3 cents.
Our View
Eaton managed to beat first-quarter earnings and total revenue estimates, thanks to growth in organic sales. However, negative currency translations continue to hurt the company earnings.
In the reported quarter, Eaton registered a year-over-year growth in booking in all its segments except Electrical Systems and Services, which remained flat.
We believe growth in orders from most of Eaton’s operating segments and benefits from restructuring activities will drive its performance and help it achieve its new guidance for the year.
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Eaton Corp. (ETN) Beats Q1 Earnings, Revenue Estimates
Eaton Corporation plc’s (ETN - Free Report) first-quarter 2017 operating earnings per share of 96 cents beat the Zacks Consensus Estimate of 87 cents by 10.3%.
The reported earnings exceeded management’s guidance range of 80–90 cents per share. The bottom line was up 9.1% from the year-ago quarter level.
Revenues
In the quarter under review, Eaton’s total revenue came in at $4.85 billion, which surpassed the Zacks Consensus Estimate of $4.69 billion by 3.4%. Total revenue was 1% higher than the year-ago level.
The year-over-year sales increase consists of 2% growth in organic sales, partially offset by a 1% decline from negative currency translation.
Total revenue improved primarily due to a higher contribution from its Electric Products and Hydraulics segments, offset marginally by lower contribution from Vehicle, Aerospace, and Electrical Systems and Services (2.6%) segments.
Eaton Corporation, PLC Price, Consensus and EPS Surprise
Eaton Corporation, PLC Price, Consensus and EPS Surprise | Eaton Corporation, PLC Quote
Quarterly Highlights
Cost of products sold in the reported quarter was $3,310 million, up 0.6% from the prior-year period.
Selling and administrative expenses decreased 0.8% to $885 million from $892 million a year ago.
In the first quarter of 2017, the company’s research and development expenses were $143 million, down 4.0% from $149 million in the prior-year quarter.
Interest expenses of $61 million were up 7.0% from the prior-year quarter figure.
Financial Update
Eaton’s cash and short-term investments were $222 million as of Mar 31, 2017, compared with $543 million as of Dec 31, 2016.
As of Mar 31, 2017, long-term debt was $6,677 million compared with $6,711 million as of Dec 31, 2016.
Guidance
Second-quarter 2017 earnings per share are expected to be between $1.05 and $1.15.
Thanks to its solid first-quarter performance, Eaton now expects 2017 operating earnings in the range of $4.45–$4.75 per share, up from the prior guidance of $4.30–$4.60 per share.
A Peer Release
ABB Ltd reported first-quarter 2017 earnings of 28 cents per share, beating the Zacks Consensus Estimate of 26 cents by 7.7%.
Upcoming Releases
CUI Global Inc. is slated to report first-quarter 2017 earnings on May 10. The Zacks Consensus Estimate is pegged at a loss of 4 cents.
SPX FLOW Inc. (FLOW - Free Report) is slated to report first-quarter earnings on May 3. The Zacks Consensus Estimate is pegged at 3 cents.
Our View
Eaton managed to beat first-quarter earnings and total revenue estimates, thanks to growth in organic sales. However, negative currency translations continue to hurt the company earnings.
In the reported quarter, Eaton registered a year-over-year growth in booking in all its segments except Electrical Systems and Services, which remained flat.
We believe growth in orders from most of Eaton’s operating segments and benefits from restructuring activities will drive its performance and help it achieve its new guidance for the year.
Eaton currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>