ETN Eaton Corp New

Eaton Corp (ETN) recently jumped back to its multi-year high after reporting strong Q1 results that included a 5% earnings surprise. With four consecutive earnings surprises and a bullish growth projection, this Zacks #1 rank stock clears the momentum bar.

Company Description

Eaton Corp produces a range of industrial goods including electric and hydraulic components and systems. The company was founded in 1916 and has a market cap of $18.7 billion.

Eaton has been trending higher for most of the last two years in the global economic rebound on strong demand and booming sales. That showed up on April 20 when the company reported strong Q1 results that came in ahead of expectations.

First-Quarter Results

Revenue for the period was up 23% from last year to $3.8 billion. Earnings also looked good, coming in at 84 cents, 5% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 10% over the last four quarters.

The gains were driven by the company's Hydraulics Segment, which saw sales increase 40% to $685 million. Its largest segment, Electrical Americas was up 20% to $964 million.

Financial Profile

The company also continues to strengthen its balance sheet, with cash and short-term investments up $208 million to $697 million. Total debt is mostly unchanged from last year at $3.45 billion.

Estimates

Estimates inched higher on the good quarter, building on the trend of the last few months that has added 24 cents to the current year, currently pegged at $3.90. The next-year estimate is bullish, projecting 18% earnings growth.

Valuation

But in spite of the gains, ETN still has value, trading with PEG ratio of .77, safely below the traditional benchmark for value of 1.

2-Year Chart

On the chart, shares jumped back to the recent high on the good quarter. Look for support from the long-term trend on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
 
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