Back to top

Should You Hold Eaton (ETN) Stock in Your Portfolio Now?

Read MoreHide Full Article

Eaton Corporation’s (ETN - Free Report) extensive market reach, consistent cash flow generation, share buybacks, excellent restructuring initiatives and prudent product innovation are expected to drive its performance.

Retaining this Zacks Rank #3 (Hold) stock in your portfolio now is a good idea, given the following positive factors.

Positive Growth Projections: The Zacks Consensus Estimate for earnings is $4.61 on revenues of $20.19 billion for 2017. The bottom line reflects a 9.16% increase year over year and the top-line projection is 2.22% higher. For 2018, the Zacks Consensus Estimate for earnings is pegged at $5.08 on revenues of $20.84 billion. While earnings represent a 10.38% rally, revenues reflect a 3.27% rise.

Eaton has long-term expected earnings per share growth rate of 8.82%.

Strong Return: Eaton’s shares have gained 6.7% year to date compared with 6.3% gain of its industry.



Positive Earnings Surprise History: Eaton surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 3.05%.

Growth Drivers

Eaton operates in a number of markets and faces a wide array of competitors in varied niches. The company supplies its products to around 175 countries.  This, in a way, provides stability to its revenue generating ability, as the loss of a customer will not have any significant impact on revenues and margins.

Eaton has been investing consistently in its R&D programs to introduce new products. In the first half of 2017, the company’s research and development expenses amounted to $293 million compared with $298 million in the prior-year period.

Benefits of restructuring activities have encouraged the company to expand the program. Eaton has plans to invest $440 million in a restructuring program during the 2015-2018 period, which is expected to create a cumulative benefit of $520 million.

Stocks to Consider

Some better-ranked stocks in the sector are Belden Inc. (BDC - Free Report) , Graco Inc. (GGG - Free Report) and Harsco Corporation (HSC - Free Report) .  All these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Belden reported positive earnings surprises last four quarters with an average surprise of 3.3%. Its 2017 Zacks Consensus Estimate moved up 7.3% to $5.47 in the last 90 days.

Graco reported positive earnings surprises in last four quarters with an average surprise of 23.95%. Its 2017 Zacks Consensus Estimate moved up 8.4% to $4.52 in the last 90 days.

Harsco Corporation reported positive earnings surprises in last four quarters with an average surprise of 141.2%. Its 2017 Zacks Consensus Estimate moved up 10.5% to 63 cents in the last 90 days.

Zacks' 10-Minute Stock-Picking Secret

Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.

But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.

Learn the secret >>
 




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Belden Inc (BDC) - free report >>

Eaton Corporation, PLC (ETN) - free report >>

Graco Inc. (GGG) - free report >>

Harsco Corporation (HSC) - free report >>


More from Zacks Analyst Blog

You May Like