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Eaton (ETN) to Expand in Asia Pacific With HuanYu High Tech Stake

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Zacks Equity Research
·3 min read
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Eaton Corporation ETN announced its intention to acquire 50% of HuanYu High Tech, a subsidiary of HuanYu Group, to further expand its business in the Asia-Pacific region. HuanYu High Tech, which manufactures and markets low-voltage circuit breakers as well as contactors, registered sales of $106 million in 2019. Subject to regulatory approval, this acquisition is expected to close in the second quarter of 2021.

Eaton’s widespread operation, and HuanYu High Tech’s strong product portfolio as well as manufacturing capabilities will create new opportunities for the former in the Asian market.

Long-Term Goal

Eaton’s long-term objective is to improve the quality of life and environment through the use of power management technologies, as well as services. Eaton has been investing consistently in R&D programs to introduce new products, including power management solutions that will reduce energy consumption as well as carbon emissions.

Eaton supplies products to around 175 countries and this in a sense provides stability to the company’s revenue generation ability, as the loss of a customer will not have any significant impact on revenues and margins. Moreover, a diversified product portfolio that offers energy efficient solutions helps it to serve a wide customer base. In addition, Eaton’s strategic acquisitions allow it to further expand operations in new markets and enhance the revenue stream. Acquisitions made by the company contributed 2% to total third-quarter revenues.

It has decided to implement a multi-year restructuring program to deal with the anticipated prolonged weakness in some of the end markets served, thanks to the pandemic outbreak.

Price Performance

In the past 12 months, shares of Eaton have outperformed the industry.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Rexnord Corporation RXN, IIVI Incorporated IIVI and Regal Beloit Corporation RBC. Rexnord and IIVI currently sport a Zacks Rank #1 (Strong Buy), while Regal Beloit has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) earnings growth of Rexnord, IIVI and Regal Beloit is pegged at 8.4%, 18.2% and 10%, respectively.

The Zacks Consensus Estimate for earnings for the next reporting year for Rexnord, IIVI and Regal Beloit has moved up 5.7%, 18.5%, and 13.6%, respectively, in the past 60 days.

Zacks Names “Single Best Pick to Double”

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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

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Regal Beloit Corporation (RBC) : Free Stock Analysis Report
 
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
 
IIVI Incorporated (IIVI) : Free Stock Analysis Report
 
Rexnord Corporation (RXN) : Free Stock Analysis Report
 
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Zacks Investment Research