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Eaton (ETN) Invests $150M, To Assist in Clean Energy Transition

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Eaton (ETN - Free Report) announced an additional $150 million investment to increase the supply of its electrical power distribution solutions for customers across North America. This investment will be utilized to manufacture circuit breakers, switchboards, panelboards and other assemblies that enable power distribution for critical infrastructure across industries.

Eaton's latest $150 million investment in North American manufacturing will boost the company’s production volumes and allow it to cater to increasing customer demand for energy transition and electrification projects. This latest investment in North American manufacturing is in addition to the company’s recently announced $500 million to support electrification, energy transition and digitalization across industries.

Investment Will Support Energy Transition

ETN aims to capitalize on the planet’s accelerating transition to renewable energy by helping customers solve their most urgent power management challenges. The power management company continues to produce advanced products needed for energy transition.

Eaton’s Electrical Americas segment provides electrical services and solutions to customers in North and South America. The company’s Electrical Americas segment registered a 7% increase in orders on a rolling 12-month basis due to significant orders from data center & IT, industrial and commercial & institutional markets. The backlog of this segment is also up by 30%, which indicates rising demand for electrical equipment in North American companies.

The latest investment of $150 million, along with $500 million announced earlier, will allow Eaton to further expand and increase its manufacturing of essential electrical equipment and benefit from rising demand.

Eaton Ongoing R&D Creates New Products

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

Eaton invested $665 million in R&D programs in 2022, up 8% year over year. In the first half of 2023, it invested $366 million in R&D activities, up 9.9% from the year-ago period. ETN is expected to continue investing in R&D activities in the remaining portion of 2023 and develop new products.

Eaton’s new products enable it to provide advanced solutions to customers, which will continue to drive its overall performance. Its Electrical Americas segment is expected to register organic growth of 14-16% in 2023.

Price Performance

In the past three months, shares of Eaton have risen 17.6% compared with the industry’s 11.3% growth.


Zacks Investment Research
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Zacks Rank & Other Stocks to Consider

Eaton currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the same industry are Zurn Elkay Water Solutions Co. (ZWS - Free Report) , Energous Corporation (WATT - Free Report) and Enersys (ENS - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ZWS’ long-term (three to five-year) earnings growth rate is 15.01%. The Zacks Consensus Estimate of 2023 earnings has moved up by 5.6% in the past 60 days.

WATT delivered an average earnings surprise of 7.2% in the last four quarters. The Zacks Consensus Estimate of 2023 earnings has moved up by 13.2% in the past 60 days.

ENS’ long-term earnings growth rate is 14%. The Zacks Consensus Estimate of fiscal 2024 earnings has moved up by 0.9% in the past 60 days.

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