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Reasons to Add Eaton (ETN) to Your Portfolio at the Moment
Eaton Corporation’s (ETN - Free Report) wide market reach, accretive acquisitions, consistent investment in research and development (R&D) programs and product improvement are contributing to its strong performance.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2021 earnings per share and revenues is pegged at $6.82 and $20.23 billion, suggesting an increase of 60.8% and 13.3%, respectively, from the year-ago reported figures.
The consensus mark for 2022 earnings and revenues is pegged at $7.46 per share and $20.63 billion, respectively. The bottom- and top-line estimates suggest a 9.4% and 1.9% year-over-year increase, respectively.
Surprise History, Dividend Yield and Earnings Growth
Eaton’s trailing four-quarter earnings surprise is 10.9%, on average.
Its dividend yield is currently pegged at 1.81%, which is much better than the industry average of 0.46%.
Long-term (three to five years) earnings growth of the company is projected at 11%.
Regular Investments in R&D
Eaton 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 infrastructure and are absolutely essential in the crisis situation.
After spending $551 million in R&D in 2020, the company invested $302 million in R&D programs in first-half 2021, up 8.2% from the year ago period.
Return on Equity (ROE)
ROE is a measure of a company’s financial performance and shows how it is utilizing its funds. Eaton’s ROE is currently pegged at 15.03%, better than the industry average of 11.83%, which indicates that the company is utilizing its funds more efficiently than peers.
Over the past six months, the stock has gained 34.6% compared with the industry’s growth of 15%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Other top-ranked stocks in the same sector include A.O. Smith Corporation (AOS - Free Report) , AZZ Inc. (AZZ - Free Report) and Rexnord Corporation , each currently holding a Zacks Rank #2 (Buy).
The current dividend yield of A.O. Smith, AZZ and Rexnord — which persistently distributes dividend to shareholders — is 1.43%, 1.28% and 0.6%, respectively.
The Zacks Consensus Estimate for 2021 earnings per share of A.O. Smith and Rexnord has moved up 2.2% and 3%, respectively, in the past 60 days. In the same time frame, fiscal 2022 earnings estimates for AZZ have moved up 13%.