Back to top

Image: Bigstock

Eaton (ETN) Q2 Earnings and Revenues Beat Estimates, View Up

Read MoreHide Full Article

Eaton Corporation (ETN - Free Report) reported second-quarter 2021 earnings of $1.72 per share, which surpassed the Zacks Consensus Estimate of $1.56 by 10.3%. Furthermore, earnings were up 145.7% year over year. The bottom line was also higher than the expected range of $1.45-$1.55 per share.

GAAP earnings for the reported quarter were $1.26 per share compared with 13 cents in the year-ago period. The difference between GAAP and operating earnings for the reported quarter was due to charges of 18 cents associated with acquisitions and divestitures, 3 cents related to a multi-year restructuring program as well as 25 cents related to intangible amortization.

Revenues

Total quarterly revenues came in at $5,215 million, which beat the Zacks Consensus Estimate of $4,974 million by 4.8%. Total revenues also improved 35.2% from the year-ago quarter.

The year-over-year improvement is due to 27% growth in organic sales, 5% growth from acquisitions, and 3% from positive currency translation.

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC Price, Consensus and EPS Surprise

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

Segment Details

Electrical Americas’ total second-quarter sales were $1,849 million, up 24.1% from the year-ago level. This was due to improved organic sales, contribution from the acquisition of Tripp Lite and positive currency translation.

Electrical Global’s total sales were $1,418 million, up 27.6% from the year-ago quarter. Organic sales were up 22% from the year-ago quarter. Positive currency translation added another 6% to this segment’s sales.

Hydraulics’ total sales were $560 million, up 36.2% from the year-ago quarter.

Aerospace total sales were $625 million, up 36% from the year-ago quarter. This was due to improved organic sales, contribution from the acquisition of Cobham Mission Systems and positive currency translation.

Vehicle total sales were $675 million, up 106% from the year-ago quarter driven by an improvement in organic sales and positive currency translation.

eMobility segment’s total sales were $88 million, up 57% year over year. Improvement in organic sales and positive currency translation boosted the top line of this segment.

Highlights of the Release

Selling and administrative expenses were $876 million, up 26.8% from the year-ago quarter.

During the quarter, the company closed the acquisitions of Cobham Mission Systems and 50% of Jiangsu YiNeng Electric’s busway business in China. On Aug 2, the company completed the sale of Hydraulics unit to Danfoss.

Its second-quarter research and development expenses were $154 million, up 22.2% from the prior-year period. Interest expenses for the quarter were $37 million, down 2.6% from the year-ago period.

Orders in Electrical Americas and Electrical Global were up 43% and 46% year over year, respectively. Orders from the Aerospace segment were down 16% from second-quarter 2020 due to downturn in commercial markets.

Financial Update

Eaton’s cash was $279 million as of Jun 30, 2021 compared with $438 million on Dec 31, 2020.

As of Jun 30, 2021, the company’s long-term debt was $8,721 million, up from $7,010 million on Dec 31, 2020.

Guidance

Eaton’s third-quarter 2021 earnings are expected in the range of $1.72-$1.82 per share. It now expects organic revenue growth in the range of 11-13%. The company also anticipates positive currency translation to add 1% to third-quarter earnings.

Eaton now expects organic revenue growth within 11-13% for 2021, up from the prior guided range of 7-9%. Segment operating margin for 2021 is now expected in the range of 18.4-18.8%, up from earlier expectation of 18.1-18.5%.

The company raised its 2021 earnings guidance to the range of $6.58-$6.88 per share from the prior projection $5.90-$6.30, taking into account strong second-quarter performance and expected high organic sales for the remainder of the year. It is targeting share buyback in the range of $500-$700 million in 2021. The company is aiming for 11-13% earnings growth in the 2020-2025 time period.

Zacks Rank

Currently, Eaton has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

A.O. Smith Corporation (AOS - Free Report) came up with second-quarter 2021 quarterly earnings of 73 cents per share, which beat the Zacks Consensus Estimate of 65 cents by 12.3%.

AZZ Inc. (AZZ - Free Report) reported first-quarter fiscal 2022 quarterly earnings of 88 cents per share, which beat the Zacks Consensus Estimate of 62 cents by 41.9%.

Franklin Electric (FELE - Free Report) came up with second-quarter 2021 quarterly earnings of 83 cents per share, which lagged the Zacks Consensus Estimate of 85 cents by 2.3%.