Post Earnings Coverage as Eaton's Earnings Grew 9%; Raised Earnings Outlook

Upcoming AWS Coverage on Curtiss-Wright Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 16, 2017 / Active Wall St. announces its post-earnings coverage on Eaton Corp. PLC (NYSE: ETN). The Company released its first quarter fiscal 2017 results on May 02, 2017. The power management Company reported its first revenue growth in more than two year and surpassed top- and bottom-line expectations. Register with us now for your free membership at:

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One of Eaton's competitors within the Diversified Machinery space, Curtiss-Wright Corp. (NYSE: CW), reported on May 03, 2017, its financial results for the first quarter ended March 31, 2017. AWS will be initiating a research report on Curtiss-Wright in the coming days.

Today, AWS is promoting its earnings coverage on ETN; touching on CW. Get our free coverage by signing up to:

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Earnings Reviewed

For the three months ended March 31, 2017, Eaton reported sales of $4.85 billion, up 1% compared to sales of $4.81 billion in Q1 2016, exceeding analysts' consensus of $4.69 billion in sales. The sales increase consisted of 2% growth in organic sales and was partially offset by a 1% decline from negative currency translation. This was Eaton's first quarter of revenue growth since Q4 2014.

During Q1 2017, Eaton reported segment margins of 14.4%. Excluding restructuring costs of $17 million incurred by the segment during the reported quarter, the segment's margins were 14.8%.

Eaton announced that net income was $432 million, or $0.96 per share, for Q1 2017 compared to net income of $404 million, or $0.88 per share, in Q1 2016. Operating earnings per share, which exclude $1 million of acquisition integration charges in Q1 2017 and $1 million in Q1 2016, were up 9% on a y-o-y basis. The Company's earnings number came in ahead of Wall Street's estimates of $0.87 per share.

Eaton stated that operating cash flow in Q1 2017 was $463 million, a new first quarter record. The cash flow was inclusive of $100 million the Company put into its U.S. qualified pension plan in the reported. Eaton raised its quarterly dividend by 5% in February and repurchased $255 million of shares in the reported quarter.

Business Segment Results

During Q1 2017, sales for Eaton's Electrical Products segment were $1.7 billion, up 2% on a y-o-y basis. Organic sales were up 3% partially offset by negative currency translation of 1%. Operating profits, excluding acquisition integration charges of $1 million during the reported quarter, were $298 million, up 10% compared to the year ago period. For Q1 2017, the segment's operating margins were 17.4%, and excluding restructuring costs of $3 million, 17.6%. Orders for Electrical Products segment were up 3% on a y-o-y basis, driven by growth in the Americas and EMEA, while APAC was flat.

For Q2 FY17, Eaton's Electrical Systems and Services segment sales totaled $1.3 billion, down 1% on a y-o-y basis. Organic sales were flat and currency translation was negative 1%. Segment operating profits were $155 million, down 3% compared to the year ago same quarter. The segment's operating margins were 11.6% for the reported quarter, and excluding restructuring costs of $2 million, they were 11.8%. Electrical Systems and Services segment's orders in Q1 2017 were flat with Q1 2016, as declines in the Americas and EMEA, largely due to lower power quality orders, reflecting a slowdown after a year of strong orders in 2016 were offset by strength in APAC, which showed double-digit growth during the reported quarter.

Eaton's Hydraulics segment's sales surged 7% in Q1 2017 to $587 million. The segment's organic sales were up 9% partially offset by negative currency translation of 2%. Hydraulics segment's operating profits soared 46% to $60 million, driven by higher organic revenues and lower restructuring costs. The segment's operating margins in the reported quarter were 10.2% and excluding restructuring costs of $9 million, they were 11.8%. Hydraulics orders in Q1 2017 were up a solid 22% over Q1 2016, with growth in all geographic regions, particularly APAC.

During Q1 2017, Eaton's Aerospace segment's sales were $428 million, down 4% on a y-o-y basis. Organic sales were down 1% and currency translation was negative 3%. The segment's operating profits in the reported quarter were $79 million, down 1% compared to the year ago same period. Eaton's Aerospace segment operating margins in Q1 2017 were 18.5%, and excluding restructuring costs of $1 million, they were 18.7%. The segment's orders in the reported quarter improved 2% on a y-o-y basis.

Eaton's Vehicle segment posted sales of $788 million in Q1 2017, down 1% on a y-o-y basis. Organic sales declined 2% while currency translation was 1% positive. The segment's operating profits in Q1 2017 were $108 million, down 8% on a y-o-y basis. Operating margins in the reported quarter were 13.7%, and excluding restructuring costs of $2 million, these were 14.0%.

Fiscal 2017 Outlook

In light of strong Q1 2017, Eaton raised its earnings guidance for the year by $0.15 per share, an increase of 3% to the prior midpoint of the Company's guidance. For FY17, the Company now expects net income and operating earnings per share to be between $4.45 and $4.75, representing a 9% increase at the midpoint of its guidance over 2016. Eaton is projecting net income and operating earnings per share for Q2 2017 to be between $1.05 and $1.15.

Stock Performance

On Monday, May 15, 2017, the stock closed the trading session at $76.97, marginally up 0.38% from its previous closing price of $76.68. A total volume of 1.84 million shares have exchanged hands. Eaton's stock price surged 8.33% in the last three months, 13.85% in the past six months, and 30.87% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have soared 16.58%. The stock is trading at a PE ratio of 17.94 and has a dividend yield of 3.12%.

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