Eaton(ETN) ZACKS·2025-01-29 15:55Core 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 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].