Eaton Raises 2011 EPS Guidance On Improving Hydraulics Buiness

Eaton Corp. (ETN) on Friday raised its 2011 earnings forecast on expectations for stronger growth in its hydraulics business and improving operating margins.

The company anticipates per-share earnings in a range of $7.10 to $7.70, compared with $7 to $7.60 a share anticipated in January. Eaton predicted half of the increase of 10 cents a share will be reflected in the company's first-quarter earnings.

The company attributed the earnings increase largely to surging growth in its hydraulics business. The company now expects 16% growth in its hydraulics market this year, up from the 12% forecast in January.

Eaton supplies hydraulics systems and components used in machinery and industrial applications, including earth-moving equipment, farm machinery, autos, machine tools and power generation. The company sees particular strength in the U.S. hydraulics market, where it expects 19% growth in the market this year, up 6 percentage points from its January forecast.

The Cleveland industrial conglomerate also expects its business segment operating margin to reach 14% in 2011, up from 12.7%. The company on Friday raised its long-term operating margin target to 16% by 2015, compared with an earlier goal of 15% by 2014.

Eaton's stock was recently trading up 2.6% at 107.61 a share.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com

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