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Eaton (ETN) Buys Tripp Lite, Expands Power Quality Business

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Eaton Corporation (ETN - Free Report) announced that it has completed the acquisition of Chicago-based Tripp Lite, which will help the company to further expand the Power Quality Business in the Americas. The Tripp Lite acquisition will complement Eaton’s power quality portfolio that encompasses uninterruptible power supplies, DC power solutions, surge protective devices, switchgear, power distribution units, remote monitoring, meters, software, connectivity, enclosures and services.

Tripp Lite serves data centers, industrial, medical and communications markets. Eaton will further expand operations in this expanding market and provide clean, reliable, and energy-efficient power to critical applications, giving its clients continuous uptime to keep their business running without interruption.

Eaton’s strategic acquisitions allow it to foray into new markets and enhance revenue stream. Acquisitions made by the company contributed 2% to total fourth-quarter revenues. It is yet to close the acquisition of Cobham Missions Systems, which will expand operations and be accretive to earnings.

Organic Platform Boosts Operations

Eaton has been investing consistently in R&D programs to introduce new products, including power management solutions that will reduce energy consumption and carbon emissions.

It has laid out a 10-year plan that includes $3-billion investment in R&D programs, which will allow the company to create sustainable products over this period of time. The products supplied by Eaton have been deemed to be critical part of the global power infrastructure and are absolutely essential for power management.

Eaton supplies products to around 175 countries and most importantly, this provides stability to the company’s revenue generation ability, as the loss of a customer will not have any significant impact on revenues and margins.

Price Performance

In the past six months, shares of Eaton have gained 41.7% compared with the industry’s 38.7% rally.

Zacks Rank & Key Picks

Eaton currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include ABB Ltd (ABB - Free Report) , Emerson Electric Co. (EMR - Free Report) and Regal Beloit Corporation (RBC - Free Report) , each currently having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABB, Emerson Electric and Regal Beloit’s long-term (three to five years) earnings growth is currently projected at 6.2%, 9.8%, and 10%, respectively.

The Zacks Consensus Estimate for 2021 earnings per share of ABB and Regal Beloit has moved up 3.4% and 7.5%, respectively, in the past 60 days. In the same time period, fiscal 2021 earnings estimates for Emerson Electric has moved up 8.4%.

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