Yahoo Finance Eaton Corporation, PLC (ETN) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Eaton (ETN)? Shares have been on the move with the stock up 1.1% over the past month. The stock hit a new 52-week high of $333.06 in the previous session. Eaton has gained 32.2% since the start of the year compared to the 5.6% move for the Zacks Industrial Products sector and the 15.2% return for the Zacks Manufacturing - Electronics industry.
What's Driving the Outperformance?
The stock has a great 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 April 30, 2024, Eaton reported EPS of $2.4 versus consensus estimate of $2.28 while it beat the consensus revenue estimate by 0.72%.
For the current fiscal year, Eaton is expected to post earnings of $10.33 per share on $25 billion in revenues. This represents a 13.27% change in EPS on a 7.79% change in revenues. For the next fiscal year, the company is expected to earn $11.62 per share on $26.9 billion in revenues. This represents a year-over-year change of 12.48% and 7.57%, 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 is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb 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. The idea behind the style scores is to help investors 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 A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 30.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 21.2X. On a trailing cash flow basis, the stock currently trades at 27.7X versus its peer group's average of 18.7X. Additionally, the stock has a PEG ratio of 2.63. 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 look at the Zacks Rank for the stock, 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 meets the list of requirements. 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 Powell Industries, Inc. (POWL). POWL has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of D.
Earnings were strong last quarter. Powell Industries, Inc. beat our consensus estimate by 45.50%, and for the current fiscal year, POWL is expected to post earnings of $7.54 per share on revenue of $839.17 million.
Shares of Powell Industries, Inc. have gained 5.9% over the past month, and currently trade at a forward P/E of 18.97X and a P/CF of 28.98X.
The Manufacturing - Electronics industry is in the top 31% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ETN and POWL, even beyond their own solid fundamental situation.
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Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
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