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Can Eaton (ETN) Keep Its Earnings Beat Streak Alive in Q4?

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Eaton Corporation (ETN - Free Report) is scheduled to release fourth-quarter 2020 earnings on Feb 2, before market open. This power management company delivered an average earnings surprise of 11.9% in the last four quarters.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors at Play

Eaton implemented cost-management measures, which are likely to have provided it with some relief amid tepid demand due to weakness in end-markets served. The strategic acquisition completed by the company is likely to have boosted the bottom line in the fourth quarter. Its Electrical Americas segment growth in residential and utility markets is expected to have boosted revenues in the fourth quarter.

Lower shares outstanding are likely to have had a positive impact on the bottom line in the fourth quarter.

Expectation

Due to weakness in end-market conditions, the company’s organic revenues are expected to decline in the range of 5-7% for the fourth quarter.

The Zacks Consensus Estimate for the bottom line for the fourth quarter is pegged at $1.22 per share, indicating a 10.95% decline from the prior-year reported figure.

What Our Quantitative Model Predicts

Our proven model predicts an earnings beat for Eaton this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here as you will see below.

Eaton Corporation, PLC Price and EPS Surprise

Eaton Corporation, PLC Price and EPS Surprise

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

Earnings ESP: The company’s Earnings ESP is +2.33%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Eaton carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Investors can also consider the following players from the same industry that too have the right combination of elements to beat on earnings in the upcoming releases.

A.O. Smith Corporation (AOS - Free Report) is scheduled to report fourth-quarter 2020 earnings on Jan 28. It has an Earnings ESP of +5.29% and a Zacks Rank #3.

Franklin Electric (FELE - Free Report) is likely to come up with a beat when it reports fourth-quarter results. It has an Earnings ESP of +2.91% and a Zacks Rank #2.

Rexnord Corporation (RXN - Free Report) is likely to come up with a beat when it reports fourth-quarter results. It has an Earnings ESP of +5.05% and a Zacks Rank #3.

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