Cooper Industries plc () reported third-quarter 2011 earnings per share from continuing operations of 98 cents, above the Zacks Consensus Estimate of 96 cents and prior-yearearnings of 85 cents. The company achieved record earnings per share in the quarter withdouble digit growth for the past seven consecutive quarters.

Revenue

Total revenue in the quarter was $1.39 billion, representing a year-over-year increase of 12.0%. Revenue from sale of new products, developed in the last three years, represented 28% of total revenue. Developing markets also contributed significantly to the company’s revenue.

Longer cycle and international businesses were strong performers inspite of prevailing macro uncertainty. However, demand in both non-residential and residential construction markets remained weak.

Segment Details

Revenue in the Energy & Safety Solutions segment increased by 14.7% year over year to $752.2 million. Excluding positive currency translation impact of 2.5% and acquisitions of 2.9%, core segment revenue increased by 9.3%. Increased demand for utility products aided core revenue growth, coupled with the rising demand in global industrial and energy markets.

Revenue in the Electrical Products Group segment increased by 9.0% year over year to $637.5 million. Excluding positive foreign currency impact of 0.7% and from acquisitions of 3.7%, core segment revenue increased by 4.6%. Huge demand for industrial products as well as rising demand for energy efficiency products aided core revenue growth, partially offset by weak residential and non-residential construction markets.

Margins

Operating earnings for the quarter was $205.3 million compared with $191.4 million in the prior-year period. SG&A expense was $269.2 million compared with $236.7 million in the prior-year period.

Energy & Safety Solutions segment margin was 16.7%, down 20 basis points year over year. Electrical Products Group segment margin was 13.9%, down 220 basis points.

Balance Sheet and Cash Flow

Cash and cash equivalents were $430.6 million with long-term debt of $1.42 billion and shareowner’s equity of $3.45 billion.

Cash from its operating activities in the second quarter was a negative $177.0 million.

Outlook

The company raised its earnings per share from continuing operations guidance range to $3.78 to $3.83 from previously changed guidance of $3.75 to $3.82 for 2011. Revenue is now expected to increase by 11% to 13%. The 2010 comparative figure for revenue excludes Tools segment revenue.

For the fourth quarter of 2011, the company expects earnings per share of 91 cents to 96 cents with an increase of 1% to 3% in revenue compared with the fourth quarter of 2010, excluding Tools revenue.

The company is expected to realize an outsized portion of its growth from the developing markets in China, the Middle East and Mexico. Industrial, utility and energy markets are expected to rapidly expand and the industrializing economies will help to offset some of the declines in the already developed regions. This will eventually help to support higher growth rates for the current year.

However, heightened global competition, given that Cooper expands its international exposure, can act as a negative catalyst for the company. Major competitors of the company are ABB Ltd. (ABB - Snapshot Report), General Electric Co. (GE - Analyst Report) and Stanley Black & Decker Inc. (SWK - Analyst Report). Operations and supply sources located outside the United States, particularly the emerging markets, are subject to increased risks. Operating entities outside the USA contribute significantly to the company’s revenue and earnings.

Incorporated in Ireland and headquartered in Houston, Texas, Cooper Industries plc is a diversified manufacturer, marketer, and distributor of electrical products, tools, and hardware. General industrial manufacturers, such as those in the aerospace and automobile industries, are the main users of Cooper’s power tools and assembly systems. Its brands include Buss, Edison, Crouse Hinds, Weller, DGD, Buckeye, Cooper and Master Power.

We continue to maintain a Neutral rating on Cooper Industries, with a Zacks #4 Rank (Sell recommendation) over the next one-to-three months.