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Eaton (ETN) to Report Q3 Earnings: What's in the Offing?

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Eaton Corporation (ETN - Free Report) is scheduled to release third-quarter 2021 earnings on Nov 2, before market open. This power management company delivered an earnings surprise of 10.9% in the last four quarters, on average.

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

Factors at Play

Eaton’s third-quarter earnings are likely to have benefited from lower shares outstanding than the last-year level. The rollout of vaccines and an improvement in end-market conditions are expected to have increased the demand for its products, and boosted earnings.

Eaton completed the acquisition of Cobham Mission Systems and a 50% stake in Jiangsu YiNeng Electric’s busway business in China in the second quarter. Synergies from these acquired assets are expected to have contributed to earnings in the third quarter. The company’s September-quarter numbers are also expected to have gained from cost-savings initiatives. The Hydraulics business sale is part of Eaton’s transformation process and is expected to have led to the generation of higher year-over-year earnings in the third quarter.

Expectations

Third-quarter 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 anticipates positive currency translation to add 1% to third-quarter earnings. Segment operating margin is expected in the range of 19-19.4% for the quarter.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.73 per share, indicating a 46.6% increase from the prior-year reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict 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, which is not 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: Eaton has an Earnings ESP of +0.04%. 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 #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

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

Columbus McKinnon Corporation (CMCO - Free Report) is likely to come up with an earnings beat when it reports second-quarter fiscal 2022 results on Oct 28 before the market closes. It has an Earnings ESP of +5.26% and a Zacks Rank of 2, at present.

Reliance Steel & Aluminum Co. (RS - Free Report) is likely to deliver an earnings beat when it reports third-quarter results on Oct 28. It has an Earnings ESP of +3.54% and sports a Zacks Rank #1, currently.

Tetra Tech Inc. (TTEK - Free Report) is likely to pull off an earnings beat when it reports fourth-quarter fiscal 2021 earnings on Nov 17 after the market closes. It has an Earnings ESP of +0.50% and a Zacks Rank of 2, presently.