Eaton (ETN) Q3 Earnings Beat Estimates, 2023 Guidance Raised
Eaton Corporation ETN has reported third-quarter 2023 earnings of $2.47 per share, which surpassed the Zacks Consensus Estimate by 5.6%. The bottom line increased by 22.3% year over year and beat the guidance of $2.27-$2.37 per share.
GAAP earnings for the reported quarter were $2.22 per share compared with $1.52 in the year-ago quarter. The difference between GAAP and operating earnings for the reported quarter was due to charges of 21 cents for intangible amortization, 1 cent for a multi-year restructuring program and 3 cents for acquisitions and divestitures.
Revenues
Total quarterly revenues were $5,880 million, which lagged the Zacks Consensus Estimate of $5,894 million by 0.2%. Total revenues improved 10.7% from the year-ago quarter. Third-quarter revenues gained from a 9% increase in organic sales.
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 third-quarter sales were $2,594 million, up 19.1% from the year-ago quarter. The improvement was due to increased organic sales. Operating profits were $719 million, up 40.7% year over year.
Electrical Global’s total sales were $1,503 million, up 1.1% from the year-ago quarter. Organic sales were flat from the year-ago quarter, with positive currency translation adding 2%, offset by a negative impact from a small divestiture. Operating profits were $328 million, up 8% from the year-ago quarter.
Aerospace’s total sales were $867 million, up 13% from the year-ago quarter, driven by organic sales and positive currency translation. Operating profits were $209 million, up 24.1% year over year.
Vehicle’s total sales were $753 million, up 1% from the year-ago quarter, driven by positive currency translation offset by a drop in organic sales. Operating profits were $131 million, up 17.4% year over year.
The eMobility segment’s total sales were $163 million, up 19% year over year, driven by organic sales. The segment broke even in the quarter, with a 150-basis point improvement compared with the third quarter of 2022, driven by higher volumes from ramping programs and improved net manufacturing productivity.
Highlights of the Release
Selling and administrative expenses were $949 million, up 16.7% from the year-ago quarter.
ETN’s third-quarter research and development expenses were $187 million, up 13.3% from the prior-year period. Interest expenses for the quarter were $33 million, down 10.8% from the year-ago quarter.
Eaton’s backlog growth, with orders, increased by 19% in Electrical Americas and 22% in Aerospace on a rolling 12-month basis.
Financial Update
As of Sep 30, 2023, the company’s cash was $348 million, up from $294 million as of Dec 31, 2022.
As of Sep 30, 2023, ETN’s long-term debt was $8,150 million, down 2.1% from $8,321 million as of Dec 31, 2022.
Guidance
Eaton’s fourth-quarter 2023 earnings are expected to be $2.39-$2.49 per share. The Zacks Consensus Estimate is $2.39 per share, much lower than the midpoint of the company’s guidance. Eaton expects its organic sales growth guidance in the band of 8-10% for the fourth quarter.
Eaton raised its adjusted earnings per share in the range of $8.95-$9.05 from $8.65-$8.85 for 2023. The company narrowed full-year organic growth guidance to a range of 11% to 12%.
The company also raised full-year operating cash flow guidance to $3.3-$3.7 billion, up $100 million at the midpoint.
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.
Upcoming Releases
Parker Hannifin Corporation PH is scheduled to report fiscal first-quarter 2024 results on Nov 2, before market open. The Zacks Consensus Estimate for earnings is pegged at $5.53 per share, indicating a year-over-year increase of 12.45%.
The long-term (three- to five-year) earnings growth of Parker Hannifin is pinned at 11.78%. The Zacks Consensus Estimate for fiscal 2024 earnings per share is $22.62, implying year-over-year growth of 4.97%.
Ingersoll Rand Inc. IR is scheduled to report third-quarter results on Nov 1. The Zacks Consensus Estimate for earnings is pegged at 70 cents per share, suggesting a year-over-year increase of 12.9%.
The long-term (three- to five-year) earnings growth of Ingersoll Rand is pinned at 11.17%. The Zacks Consensus Estimate for 2023 earnings is $2.76, implying year-over-year growth of 16.95%.
Johnson Controls International plc JCI is scheduled to report fiscal fourth-quarter results soon. The Zacks Consensus Estimate for earnings is pegged at $1.09 per share, indicating a year-over-year increase of 10.10%.
The long-term earnings growth of JCI is pinned at 13.56%. The Zacks Consensus Estimate for fiscal 2023 EPS is pegged at $3.54, implying year-over-year growth of 18%.
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