Eaton (ETN) Beats Q3 Earnings Estimates, Lags Revenues
Zacks Investment Research | Nov 01, 2016 04:18AM ET
Eaton Corporation plc’s (NYSE:ETN) third-quarter 2016 operating earnings per share of $1.15 were a penny higher than the Zacks Consensus Estimate. Also, reported earnings were within management’s guidance range of $1.00 to $1.20 per share. Moreover, the bottom line surged 20% from the year-ago quarter figure.
Revenues
In the quarter under review, Eaton’s total revenue came in at $4.99 billion, lagging the Zacks Consensus Estimate of $5.05 billion by 1.2%.
On a year-over-year basis, revenues were down nearly 4% due to lower Aerospace (2.9%), Vehicle (12.4%), Electrical Systems and Services (3.4%), and Hydraulics (6.1%) sales.
Unfavorable currency translation and a decline in organic sales were the primary reasons for the revenue decline. Sales took a 1% hit from currency translation, while the drop in organic sales accounted for 3%.
EATON CORP PLC Price, Consensus and EPS Surprise
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Ball Corp. (NYSE:BLL) , a Zacks Rank #2 stock, is slated to report third-quarter 2016 earnings on Nov 3. The Zacks Consensus Estimate is pegged at 92 cents.
TASER International Inc. (NASDAQ:TASR) , with a Zacks Rank #3, is expected to report third-quarter earnings on Nov 9. The Zacks Consensus Estimate is pegged at 5 cents.
Our View
Eaton managed to beat third-quarter earnings estimates even though revenues lagged the mark. The top line was also down on a year-over-year basis due to persistent weakness in the company’s end-markets and negative currency translations.
We are concerned about the continuing decline in bookings at Eaton’s business segments. Bookings at the Electrical Systems and Services, and the Hydraulics segments were down 5% and 3% respectively, year over year. Bookings in Electrical Products were also down 1%. However, Aerospace segment bookings were up 15%.
Softness in the end-markets is hurting organic sales of the company. Management projects a 4% decline in organic revenues in 2016.
Eaton currently carries a Zacks Rank #4 (Sell).
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