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Eaton (ETN) Q4 Earnings Surpass Estimates, Revenues Up Y/Y

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Eaton Corporation ETN reported fourth-quarter 2021 earnings of $1.72 per share, which surpassed the Zacks Consensus Estimate of $1.71 by 0.6%. Furthermore, earnings were up 18.6% year over year.

GAAP earnings for the reported quarter were $1.37 per share compared with $1.18 in the year-ago period. The difference between GAAP and operating earnings for the reported quarter was due to charges of 23 cents associated with intangible amortization, 3 cents related to a multi-year restructuring program, and 9 cents pertaining to acquisitions and divestitures.

Revenues

Total quarterly revenues came in at $4,798 million, which missed the Zacks Consensus Estimate of $4,904 million by 2.2%. Total revenues, however, improved 2.4% from the year-ago quarter.

The year-over-year improvement is due to 6% growth in organic sales and 7% growth from acquisitions, offset by 1% negative currency translation and 10% decline due to the Hydraulics business divestiture.

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC Price, Consensus and EPS Surprise
Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC price-consensus-eps-surprise-chart | Eaton Corporation, PLC Quote

Segment Details

Electrical Americas’ total fourth-quarter sales were $1,917 million, up 12.6% from the year-ago level. This improvement was due to improved organic sales and contribution from the acquisition of Tripp Lite. Operating profits were $368 million, up 3% year over year.

Electrical Global’s total sales were $1,424 million, up 13.7% from the year-ago quarter. Organic sales were up 15% from the year-ago quarter, offset by negative currency translation of 1%. Operating profits were $277 million, up 33% year over year.

Aerospace’s total sales were $759 million, up 40% from the year-ago quarter. This was due to improved organic sales and contribution from the acquisition of Cobham Mission Systems, marginally offset by negative currency translation. Operating profits were $189 million, up 91% year over year.

Vehicle total sales were $610 million, down 2% from the year-ago quarter due to a drop in organic sales and negative currency translation. Operating profits were $100 million, down 3% year over year.

eMobility segment’s total sales were $88 million, up 4% year over year due to an improvement in organic sales.

Highlights of the Release

Selling and administrative expenses were $751 million, down 1.8% from the year-ago quarter.

ETN’s fourth-quarter research and development expenses were $162 million, up 15.7% from the prior-year period. Interest expenses for the quarter were $74 million, down 3.9% from the year-ago period.

Orders in Electrical Americas, Electrical Global, and Aerospace were up 20%, 22%, and 19% year over year, respectively.

Financial Update

Eaton’s cash was $297 million as of Dec 31, 2021 compared with $438 million on Dec 31, 2020.

As of Dec 31, 2021, the company’s long-term debt was $6,831 million, down from $7,010 million on Dec 31, 2020.

For the fourth quarter, adjusted operating cash flow was $856 million and free cash flow totaled $693 million.

Guidance

Eaton’s first-quarter 2022 earnings are expected in the range of $1.55-$1.65 per share. It now expects organic revenue growth in the range of 7-9% for the first quarter.

Eaton expects 2022 earnings per share in the range of $7.30-$7.70. ETN now expects organic revenue growth in the range of 7-9% for 2022. Segment operating margin for 2022 is now expected in the range of 19.9-20.3%.

Eaton is targeting share buyback in the range of $200-$300 million in 2022.

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.

Other Releases

A.O. Smith Corporation AOS came up with fourth-quarter 2021 quarterly earnings of 77 cents per share, which beat the Zacks Consensus Estimate of 87 cents by nearly 13%.

A.O. Smith’s long-term (three to five years) earnings growth is pegged at 9%. The Zacks Consensus Estimate for AOS’ 2022 earnings per share indicates 19.9% year-over-year growth.

AZZ Inc. AZZ reported third-quarter fiscal 2022 quarterly earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 82 cents by 3.7%.

AZZ reported an average earnings surprise of 16.9% in the last four quarters. The Zacks Consensus Estimate for AZZ’s fiscal 2022 earnings per share indicates 50.2% year-over-year growth.

Emerson EMR came up with first-quarter fiscal 2022 quarterly earnings of $1.05 per share, which beat the Zacks Consensus Estimate of 99 cents by 6.1%.

Emerson’s long-term (three to five years) earnings growth is pegged at 8.7%. The Zacks Consensus Estimate for EMR’s fiscal 2022 earnings per share indicates 19.8% year-over-year growth.


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