Eaton Corporation (ETN - Free Report) reported first-quarter 2019 earnings of $1.26 per share, which surpassed the Zacks Consensus Estimate of $1.25 by 0.8%. The reported earnings were at the higher end of management’s guided range of $1.18-$1.28 per share. Moreover, the bottom line marked a 14.5% improvement from the year-ago level.
Revenues
Total revenues in the quarter came in at $5,305 million, lagging the Zacks Consensus Estimate of $5,397 million by 1.7%. However, quarterly revenues were 1.1% higher than the year-ago quarter.
The year-over-year revenue increase, which includes 4% organic sales growth, was partially offset by a 3% negative impact from currency translation.
Segment Details
Electrical Products’ total first-quarter sales were $1,760 million, up 2% from the year-ago level. Organic sales, up 5% from the prior-year quarter, were negatively impacted by 3% due to currency translation. Operating income was $332 million, up 8% year over year.
Electrical Systems and Services’ total sales were $1,464 million, up 6% from the year-ago quarter. Organic sales, up 8% from the year-ago quarter, were negatively impacted by 2% due to currency translation. Operating income in the quarter was $192 million, up 15% year over year.
Hydraulics total sales were $686 million, down 3% from the year-ago quarter. Organic sales, up 1% from a year ago, were negatively impacted by 4% due to currency translation. Operating income in the quarter was $80 million, down 11% year over year.
Aerospace total sales were $502 million, up 10% from the year-ago quarter due to 11% organic sales growth. Additionally, operating income in the quarter was $116 million, up 30% year over year.
Vehicle total sales were $810 million, down 9% from the year-ago quarter, owing to a decline in organic sales and negative currency translation. Moreover, operating income in the quarter was $122 million, down 8% year over year.
eMobility segment’s total sales were $83 million, up 8% from the year-ago quarter. Organic sales, up 9% from the prior-year level, were negatively impacted by 1% due to currency translation. Operating income in the quarter was $5 million, down 55% year over year, primarily due to higher spending on research and development activities.
Quarterly Highlights
Segment margins in the reported quarter were 16%, up 80 basis points from the year-ago level.
Cost of products sold in the reported quarter was $3,573 million, in line with the year-ago figure.
Selling and administrative expenses were $917 million, up 3.1% from the year-ago quarter.
The company’s research and development expenses in the first quarter were $156 million, in line with the prior-year period. Interest expenses of $66 million were down 5.7% from the prior-year quarter.
Orders in Electrical Products, Electrical Systems and Services, and Aerospace were up 4%, 8% and 18% year over year, respectively. On the contrary, Hydraulics’ orders were down 11% year over year due to weakness in the global mobile equipment market.
The company repurchased shares worth $150 million in the reported quarter and raised its quarterly dividend by 8%.
Financial Update
Eaton’s cash & cash equivalents were $303 million as of Mar 31, 2019 compared with $283 million on Dec 31, 2018.
As of Mar 31, 2019, long-term debt of the company was $6,782 million, up marginally from $6,768 million on Dec 31, 2018.
Guidance
Second-quarter 2019 earnings per share are expected between $1.45 and $1.55.
The company expects 2019 earnings within $5.72-$6.02, up from the prior range of $5.70-$6.00 per share, with organic growth expectation of 4%. Segment operating margin for 2019 is expected within 17.1-17.5%, up from the prior guided range of 17-17.4%.
Eaton has plans to repurchase shares worth $400 million in 2019.
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.
Upcoming Releases
Emerson Electric Co. (EMR - Free Report) is slated to announce second-quarter fiscal 2019 earnings on May 7. The Zacks Consensus Estimate for the quarter is pegged at 84 cents.
Regal Beloit Corporation (RBC - Free Report) is slated to announce first-quarter 2019 earnings on May 7. The Zacks Consensus Estimate for the quarter to be reported is pegged at $1.41.
Enersys (ENS - Free Report) is scheduled to report fiscal fourth-quarter 2019 earnings on May 15. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at $1.42 per share.
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Eaton Corporation (ETN - Free Report) reported first-quarter 2019 earnings of $1.26 per share, which surpassed the Zacks Consensus Estimate of $1.25 by 0.8%. The reported earnings were at the higher end of management’s guided range of $1.18-$1.28 per share. Moreover, the bottom line marked a 14.5% improvement from the year-ago level.
Revenues
Total revenues in the quarter came in at $5,305 million, lagging the Zacks Consensus Estimate of $5,397 million by 1.7%. However, quarterly revenues were 1.1% higher than the year-ago quarter.
The year-over-year revenue increase, which includes 4% organic sales growth, was partially offset by a 3% negative impact from currency translation.
Segment Details
Electrical Products’ total first-quarter sales were $1,760 million, up 2% from the year-ago level. Organic sales, up 5% from the prior-year quarter, were negatively impacted by 3% due to currency translation. Operating income was $332 million, up 8% year over year.
Electrical Systems and Services’ total sales were $1,464 million, up 6% from the year-ago quarter. Organic sales, up 8% from the year-ago quarter, were negatively impacted by 2% due to currency translation. Operating income in the quarter was $192 million, up 15% year over year.
Hydraulics total sales were $686 million, down 3% from the year-ago quarter. Organic sales, up 1% from a year ago, were negatively impacted by 4% due to currency translation. Operating income in the quarter was $80 million, down 11% year over year.
Aerospace total sales were $502 million, up 10% from the year-ago quarter due to 11% organic sales growth. Additionally, operating income in the quarter was $116 million, up 30% year over year.
Vehicle total sales were $810 million, down 9% from the year-ago quarter, owing to a decline in organic sales and negative currency translation. Moreover, operating income in the quarter was $122 million, down 8% year over year.
eMobility segment’s total sales were $83 million, up 8% from the year-ago quarter. Organic sales, up 9% from the prior-year level, were negatively impacted by 1% due to currency translation. Operating income in the quarter was $5 million, down 55% year over year, primarily due to higher spending on research and development activities.
Quarterly Highlights
Segment margins in the reported quarter were 16%, up 80 basis points from the year-ago level.
Cost of products sold in the reported quarter was $3,573 million, in line with the year-ago figure.
Selling and administrative expenses were $917 million, up 3.1% from the year-ago quarter.
The company’s research and development expenses in the first quarter were $156 million, in line with the prior-year period. Interest expenses of $66 million were down 5.7% from the prior-year quarter.
Orders in Electrical Products, Electrical Systems and Services, and Aerospace were up 4%, 8% and 18% year over year, respectively. On the contrary, Hydraulics’ orders were down 11% year over year due to weakness in the global mobile equipment market.
The company repurchased shares worth $150 million in the reported quarter and raised its quarterly dividend by 8%.
Financial Update
Eaton’s cash & cash equivalents were $303 million as of Mar 31, 2019 compared with $283 million on Dec 31, 2018.
As of Mar 31, 2019, long-term debt of the company was $6,782 million, up marginally from $6,768 million on Dec 31, 2018.
Guidance
Second-quarter 2019 earnings per share are expected between $1.45 and $1.55.
The company expects 2019 earnings within $5.72-$6.02, up from the prior range of $5.70-$6.00 per share, with organic growth expectation of 4%. Segment operating margin for 2019 is expected within 17.1-17.5%, up from the prior guided range of 17-17.4%.
Eaton has plans to repurchase shares worth $400 million in 2019.
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.
Upcoming Releases
Emerson Electric Co. (EMR - Free Report) is slated to announce second-quarter fiscal 2019 earnings on May 7. The Zacks Consensus Estimate for the quarter is pegged at 84 cents.
Regal Beloit Corporation (RBC - Free Report) is slated to announce first-quarter 2019 earnings on May 7. The Zacks Consensus Estimate for the quarter to be reported is pegged at $1.41.
Enersys (ENS - Free Report) is scheduled to report fiscal fourth-quarter 2019 earnings on May 15. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at $1.42 per share.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
Click to get it free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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