Eaton (ETN) Beats Q2 Earnings Estimates, Ups 2022 EPS View

Eaton Corporation ETN has reported second-quarter 2022 earnings of $1.87 per share, which surpassed the Zacks Consensus Estimate of $1.82 by 2.8%. Earnings were up 9% year over year. Second-quarter earnings were near the higher end of the company’s guidance of $1.78-$1.88.

GAAP earnings for the reported quarter were $1.50 per share compared with $1.26 in the year-ago period. The difference between GAAP and operating earnings for the reported quarter was due to charges of 24 cents associated with intangible amortization, 2 cents related to a multi-year restructuring program, and 11 cents pertaining to acquisitions and divestitures.

Revenues

Total quarterly revenues were $5,212 million, marginally lagging the Zacks Consensus Estimate of $5,227 million. Total revenues declined 0.05% from the year-ago quarter.

Revenues gained from an 11% increase in organic sales and acquisitions added 2%. These positives were offset by an 11% decline from divestitures and a 2% decrease from a negative currency translation.

Eaton Corporation, PLC Price, Consensus and EPS Surprise

 

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC price-consensus-eps-surprise-chart | Eaton Corporation, PLC Quote

Segmental Details

Electrical Americas’ total second-quarter sales were $2,131 million, up 15% from the year-ago level. The improvement was due to increased organic sales, marginally offset by a negative currency translation. Operating profits were $495 million, up 26% year over year.

Electrical Global’s total sales were $1,495 million, up 5% from the year-ago quarter. Organic sales were up 12% from the year-ago quarter, offset by a negative currency translation of 7%. Operating profits were $282 million, up 9% year over year.

Aerospace’s total sales were $742 million, up 19% from the year-ago quarter. This was due to improved organic sales and contributions from the acquisition of Mission Systems, marginally offset by a negative currency translation. Operating profits were $163 million, up 24% year over year.

Vehicle total sales were $708 million, up 5% from the year-ago quarter due to an increase in organic sales, partially offset by negative currency translation. Operating profits were $108 million, down 11% year over year.

The eMobility segment’s total sales were $136 million, up 55% year over year due to an improvement in organic sales and the acquisition of Royal Power Solutions, offset marginally by a negative currency translation.

Highlights of the Release

Selling and administrative expenses were $828 million, down 5.5% from the year-ago quarter.

ETN’s second-quarter research and development expenses were $168 million, up 9.1% from the prior-year period. Interest expenses for the quarter were $31 million, down 16.2% from the year-ago period.

Eaton’s Electrical segment backlog was up 74% and rolling 12-month orders increased 25%, while Aerospace backlog was up 12%, with rolling 12-month orders rising 19%, all on an organic basis.

Financial Update

Eaton’s cash was $364 million as of Jun 30, 2022, compared with $297 million as of Dec 31, 2021.

As of Jun 30, 2022, the company’s long-term debt was $6,277 million, down from $6,831 million as of Dec 31, 2021.

Guidance

Eaton’s third-quarter 2022 earnings are expected to be $1.95-$2.05 per share. ETN expects organic revenue growth of 13-15% for the third quarter.

Eaton has raised the 2022 earnings per share guidance to $7.36-$7.76 from the previously mentioned $7.32-$7.72 based on strong organic growth. ETN expects organic revenue growth of 11-13% for 2022. The segmental operating margin for 2022 is expected to be 20-20.4%.

Eaton is targeting a share buyback of $200-$300 million for 2022.

Zacks Rank

Currently, Eaton has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

A.O. Smith Corporation AOS came up with second-quarter 2022 earnings of 82 cents per share, which beat the Zacks Consensus Estimate of 81 cents by 1.2%.

A.O. Smith’s long-term (three to five years) earnings growth is pegged at 9%. The Zacks Consensus Estimate for AOS’ 2022 earnings per share indicates 17.9% year-over-year growth.

AZZ Inc. AZZ reported first-quarter fiscal 2023 earnings of $1.40 per share, which beat the Zacks Consensus Estimate of $1.03 by 35.9%.

AZZ reported an average earnings surprise of 20.7% in the last four quarters. The Zacks Consensus Estimate for AZZ’s fiscal 2023 earnings per share indicates 14.7% year-over-year growth.

Regal Rexnord Corporation RRX came up with second-quarter 2022 earnings of $2.76 per share, which beat the Regal Rexnord Zacks Consensus Estimate of $2.62 by 5.3%.

Regal Rexnord’s long-term earnings growth is pegged at 10%. The Zacks Consensus Estimate for RRX’s 2022 earnings per share indicates 12.2% year-over-year growth.

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