Core Viewpoint - Eaton Corp. (NYSE: ETN) stock has experienced fluctuations, particularly influenced by news regarding a Chinese open-source AI model, which has affected its performance relative to peers [1]. Company Summary - Eaton Corp. has been performing in line with its peers until recent developments in the AI sector [1]. - The company has a long-term investment strategy focused on maximizing total return by purchasing stocks when they are undervalued relative to their intrinsic value [1]. Analyst's Position - The analyst holds a beneficial long position in Eaton Corp. shares through various financial instruments [2].

Forward-looking statements and non-GAAP financial information This presentation or the comments we make on our call today contain forward-looking statements concerning, among other matters, full year and first quarter 2025 adjusted earnings per share, organic revenue growth and segment operating margins; full year 2025 operating cash flow, free cash flow, and anticipated share repurchases; and assumptions about the impact on the foregoing of currency translation, tax rate and corporate expenses. These state ...

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Eaton Corporation (ETN) reported fourth-quarter 2024 earnings of $2.83 per share, which surpassed the Zacks Consensus Estimate by 0.7%. The bottom line increased around 11% year over year and was near the upper end of the guidance of $2.78-$2.84.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.GAAP earnings for the reported quarter were $2.45 per share, up 4.3% from $2.25 in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to char ...

Core Insights - Eaton reported $6.24 billion in revenue for Q4 2024, a year-over-year increase of 4.6%, with an EPS of $2.83 compared to $2.55 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $6.35 billion by 1.73%, while the EPS exceeded the consensus estimate of $2.81 by 0.71% [1] Financial Performance - Net Sales in eMobility were $147 million, below the average estimate of $160.96 million, reflecting a year-over-year decline of 10.9% [4] - Aerospace net sales reached $971 million, slightly above the estimated $961.90 million, marking an 8.5% increase year-over-year [4] - Vehicle net sales were $647 million, below the estimated $682.91 million, representing a 10.5% decline year-over-year [4] - Electrical Global net sales were $1.57 billion, matching the average estimate, with a year-over-year increase of 3.8% [4] - Electrical Americas net sales were $2.91 billion, below the estimated $2.98 billion, but showed an 8.7% increase year-over-year [4] Segment Operating Profit - Aerospace segment operating profit was $222 million, slightly below the average estimate of $223.48 million [4] - Vehicle segment operating profit was $122 million, below the average estimate of $127.08 million [4] - Electrical Global segment operating profit was $277 million, compared to the average estimate of $288.62 million [4] - Electrical Americas segment operating profit was $918 million, exceeding the average estimate of $880.27 million [4] - eMobility segment operating profit was $3 million, slightly below the average estimate of $3.97 million [4] Stock Performance - Eaton's shares returned -1.5% over the past month, while the Zacks S&P 500 composite increased by 2.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Company Performance - Eaton reported quarterly earnings of $2.83 per share, exceeding the Zacks Consensus Estimate of $2.81 per share, and up from $2.55 per share a year ago, representing an earnings surprise of 0.71% [1] - The company posted revenues of $6.24 billion for the quarter ended December 2024, which was below the Zacks Consensus Estimate by 1.73%, and an increase from $5.97 billion year-over-year [2] - Over the last four quarters, Eaton has surpassed consensus EPS estimates four times but has only topped consensus revenue estimates once [2] Stock Outlook - The immediate price movement of Eaton's stock will largely depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - Eaton shares have declined approximately 1.4% since the beginning of the year, while the S&P 500 has gained 3.2% [3] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $2.73 on revenues of $6.34 billion, and for the current fiscal year, it is $12.03 on revenues of $26.76 billion [7] - The estimate revisions trend for Eaton is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Manufacturing - Electronics industry, to which Eaton belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of Eaton's stock may also be influenced by the overall outlook for the industry [8]

Financial Performance - Fourth quarter 2024 earnings per share were $2.45, a record and up 4% from Q4 2023; adjusted earnings per share were $2.83, up 11% from Q4 2023[3][7] - For full year 2024, record earnings per share were $9.50, with adjusted earnings per share of $10.80, up 18% from 2023[7][8] - The company expects 2025 earnings per share to be between $10.60 and $11.00, representing a 14% increase at the midpoint over 2024[7][9] - The diluted earnings per share after restructuring charges was $0.14 for Q4 2024, compared to $0.02 in Q4 2023, with a full-year EPS of $0.40 versus $0.11 in 2023[36] Sales and Revenue - Sales for Q4 2024 reached $6.2 billion, a record and up 5% from Q4 2023; organic sales increased by 6%[4][5] - Total net sales for Q4 2024 reached $6,240 million, a 4.6% increase from $5,967 million in Q4 2023[24] - The Electrical Americas segment reported net sales of $2,905 million in Q4 2024, a 8.7% increase from $2,672 million in Q4 2023[24] - Aerospace segment sales were a record $971 million, up 9% from Q4 2023, with operating profits of $222 million, up 11%[13] - The Vehicle segment reported sales of $647 million, down 10% from Q4 2023, but achieved a record operating margin of 18.8%[16] Cash Flow - Operating cash flow for 2024 was $4.3 billion, up 19% from 2023, and free cash flow was $3.5 billion, up 23% from 2023[8] - Free cash flow for Q4 2024 was $1,342 million, compared to $1,055 million in Q4 2023, marking a 27.3% increase[28] Segment Performance - Electrical Americas segment sales for Q4 2024 were $2.9 billion, up 9% from Q4 2023, with operating profits of $918 million, up 20%[10] - The Aerospace segment achieved a net sales increase of 8.5%, reaching $971 million in Q4 2024 compared to $895 million in Q4 2023[24] - The company reported a total segment operating profit of $1,542 million for Q4 2024, an increase from $1,360 million in Q4 2023, reflecting a 13.4% growth[24] - Segment margins for 2024 were a record 24.0%, a 200-basis point improvement over 2023[6] Backlog and Demand - Backlog at the end of December 2024 was up 29% organically over December 2023, indicating strong demand[11][15] Restructuring and Charges - A new multi-year restructuring program was initiated in Q1 2024, with expected total charges of $475 million and anticipated mature year benefits of $375 million[35] - Restructuring program charges for Q4 2024 totaled $70 million, compared to $11 million in Q4 2023, with total charges for the year reaching $202 million versus $57 million in 2023[36] - Workforce reductions accounted for $42 million in Q4 2024, significantly up from $2 million in Q4 2023, with total workforce-related charges for the year at $120 million compared to $19 million in 2023[36] - The eMobility segment incurred restructuring charges of $22 million in Q4 2024, up from no charges in Q4 2023, with total charges for the year at $25 million compared to $7 million in 2023[36] - The Electrical Global segment reported $18 million in restructuring charges for Q4 2024, compared to $4 million in Q4 2023, with total charges for the year at $88 million versus $26 million in 2023[36] - Corporate restructuring charges amounted to $16 million in Q4 2024, up from $2 million in Q4 2023, with total charges for the year at $29 million compared to $8 million in 2023[36] - The Aerospace segment had restructuring charges of $2 million in both Q4 2024 and Q4 2023, with total charges for the year increasing to $9 million from $5 million in 2023[36] Intangible Assets and Tax Benefits - Intangible asset amortization expense for Q4 2024 was $107 million, consistent with Q4 2023, while total amortization for the year was $425 million, down from $450 million in 2023[37] - The total income tax benefit from intangible asset amortization was $23 million in Q4 2024, leading to an after-tax total of $84 million, slightly up from $83 million in Q4 2023[37] - The income tax benefit related to restructuring charges was $14 million in Q4 2024, leading to a total after-tax charge of $56 million, compared to $9 million and $46 million respectively in Q4 2023[36] Acquisitions - The company acquired a 49% stake in NordicEPOD AS on May 31, 2024, enhancing its capabilities in power modules for data centers[29]

Core Viewpoint - Eaton Corporation (ETN) is anticipated to show improvements in both revenue and earnings in its upcoming fourth-quarter 2024 results, scheduled for January 31, before market open [1][2]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for ETN's fourth-quarter revenues is $6.35 billion, reflecting a 6.4% increase from the previous year [2]. - The consensus estimate for earnings per share (EPS) is $2.81, indicating a year-over-year growth of 10.2% [2][3]. Earnings History and Surprise - Eaton has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 3.63% [4][5]. Factors Influencing Earnings - Growth in electrification, energy transition, and reindustrialization is driving performance across nearly 75% of ETN's end markets [8]. - The company has seen a substantial increase in its backlog, benefiting from global trends in electrification and digitalization [9]. - The demand for efficient power solutions in the artificial intelligence-driven data center space is expected to positively impact earnings [10]. - Continuous investment in research and development enhances product quality and market reach, contributing to earnings growth [11]. - The broad portfolio of efficient electric solutions for commercial and institutional buildings consistently supports earnings [12]. Valuation and Market Position - Eaton's stock is currently trading at a forward 12-month P/E multiple of 25.67, which is higher than the industry average of 23.97 [13]. - Competitors like Illinois Tool Works (ITW) and Parker-Hannifin (PH) are trading at lower forward P/E multiples of 24.22 and 23.61, respectively [15]. Investment Thesis - Strong demand for products across various segments and ongoing upgrades through R&D are key drivers for Eaton's performance [16]. - The company operates in approximately 175 countries, enhancing revenue streams but also exposing it to geopolitical risks [17]. Conclusion - Rising earnings estimates and an increasing backlog are expected to boost Eaton's performance, making the stock attractive despite its premium valuation [18].

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Eaton (ETN) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on January 31, 2025, might help the stock move higher if these key numbers are better than expec ...