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Eaton Corporation, PLC (ETN) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Eaton (ETN - Free Report) ? Shares have been on the move with the stock up 8.7% over the past month. The stock hit a new 52-week high of $294.44 in the previous session. Eaton has gained 22% since the start of the year compared to the 6.8% move for the Zacks Industrial Products sector and the 15.6% return for the Zacks Manufacturing - Electronics industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 1, 2024, Eaton reported EPS of $2.55 versus consensus estimate of $2.47 while it beat the consensus revenue estimate by 1.23%.
For the current fiscal year, Eaton is expected to post earnings of $10.24 per share on $24.93 billion in revenues. This represents a 12.28% change in EPS on a 7.49% change in revenues. For the next fiscal year, the company is expected to earn $11.42 per share on $26.85 billion in revenues. This represents a year-over-year change of 11.53% and 7.68%, respectively.
Valuation Metrics
Eaton may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Eaton has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 28.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 21.7X. On a trailing cash flow basis, the stock currently trades at 25.6X versus its peer group's average of 19.1X. Additionally, the stock has a PEG ratio of 2.44. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Eaton currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Eaton passes the test. Thus, it seems as though Eaton shares could have potential in the weeks and months to come.
How Does ETN Stack Up to the Competition?
Shares of ETN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Zurn Elkay Water Solutions Cor (ZWS - Free Report) . ZWS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Zurn Elkay Water Solutions Cor beat our consensus estimate by 13.04%, and for the current fiscal year, ZWS is expected to post earnings of $1.15 per share on revenue of $1.55 billion.
Shares of Zurn Elkay Water Solutions Cor have gained 3.9% over the past month, and currently trade at a forward P/E of 27.83X and a P/CF of 21.32X.
The Manufacturing - Electronics industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ETN and ZWS, even beyond their own solid fundamental situation.
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Eaton Corporation, PLC (ETN) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Eaton (ETN - Free Report) ? Shares have been on the move with the stock up 8.7% over the past month. The stock hit a new 52-week high of $294.44 in the previous session. Eaton has gained 22% since the start of the year compared to the 6.8% move for the Zacks Industrial Products sector and the 15.6% return for the Zacks Manufacturing - Electronics industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 1, 2024, Eaton reported EPS of $2.55 versus consensus estimate of $2.47 while it beat the consensus revenue estimate by 1.23%.
For the current fiscal year, Eaton is expected to post earnings of $10.24 per share on $24.93 billion in revenues. This represents a 12.28% change in EPS on a 7.49% change in revenues. For the next fiscal year, the company is expected to earn $11.42 per share on $26.85 billion in revenues. This represents a year-over-year change of 11.53% and 7.68%, respectively.
Valuation Metrics
Eaton may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Eaton has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 28.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 21.7X. On a trailing cash flow basis, the stock currently trades at 25.6X versus its peer group's average of 19.1X. Additionally, the stock has a PEG ratio of 2.44. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Eaton currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Eaton passes the test. Thus, it seems as though Eaton shares could have potential in the weeks and months to come.
How Does ETN Stack Up to the Competition?
Shares of ETN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Zurn Elkay Water Solutions Cor (ZWS - Free Report) . ZWS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Zurn Elkay Water Solutions Cor beat our consensus estimate by 13.04%, and for the current fiscal year, ZWS is expected to post earnings of $1.15 per share on revenue of $1.55 billion.
Shares of Zurn Elkay Water Solutions Cor have gained 3.9% over the past month, and currently trade at a forward P/E of 27.83X and a P/CF of 21.32X.
The Manufacturing - Electronics industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ETN and ZWS, even beyond their own solid fundamental situation.