Eaton Earnings Beat Estimates. Why the Stock Fell.

Core Viewpoint - Eaton reported better-than-expected third-quarter earnings, but the stock fell due to a sales miss and lower fourth-quarter earnings guidance [2][5]. Financial Performance - Eaton achieved record adjusted quarterly earnings per share of $3.07 from sales of $7 billion, surpassing profit expectations of $3.05 but missing sales forecasts of $7.1 billion [3][5]. - The company reported a year-over-year sales increase of 15% in its Electrical Americas segment, while the vehicle and e-mobility segments faced accelerating declines [5][6]. Market Expectations - For the fourth quarter, Eaton expects earnings per share between $3.23 and $3.43, with a midpoint of $3.33, which is slightly below Wall Street's projection of $3.38 [4][5]. - Organic growth of 7% year-over-year was below consensus expectations, contributing to the stock's decline [4][5]. Future Outlook - Eaton maintains its sales growth expectation for 2025 at 8.5% to 9.5%, despite the accelerating declines in its vehicle and e-mobility businesses [4][6]. - Analysts have mixed ratings, with some expressing optimism about order growth and market conditions, while others remain cautious due to the sales miss [6][7].