Eaton(US:ETN) Guoxin Securities·2024-05-21 07:02Investment Rating - The report maintains a "Buy" rating for the company [14][29]. Core Views - The company is expected to benefit from strong growth in its North American electrification business and stable market share in large infrastructure projects [2][25]. - The company has shown impressive performance in its electrification business, with a significant increase in net profit and operating profit margin [2][15]. - The overall revenue growth forecast for 2024-2026 is positive, with expected increases in both revenue and net profit [29]. Financial Forecasts and Key Metrics - Revenue (in million USD) is projected to grow from 20,752 in 2022 to 28,070 in 2026, with annual growth rates of 5.7%, 11.8%, 7.3%, 6.4%, and 5.9% respectively [1]. - Net profit (in million USD) is expected to rise from 2,462 in 2022 to 4,369 in 2026, reflecting growth rates of 14.8%, 30.7%, 12.3%, 10.1%, and 9.8% [1]. - Earnings per share (EPS) is forecasted to increase from 6.16 in 2022 to 11.15 in 2026 [1]. - The EBIT margin is projected to improve from 14.4% in 2022 to 18.3% in 2026 [1]. - Return on equity (ROE) is expected to rise from 14.5% in 2022 to 17.2% in 2026 [1]. - The price-to-earnings (P/E) ratio is forecasted to decrease from 53.3 in 2022 to 29.5 in 2026, indicating a more attractive valuation over time [1]. Business Performance - In Q1 2024, the company achieved a net profit of 820 million USD, a year-on-year increase of 29% [2][15]. - The operating profit margin for Q1 2024 was reported at 23.1%, up 3.4 percentage points year-on-year [2][15]. - The electrification business in North America saw a revenue increase of 17% year-on-year in Q1 2024, with an operating profit margin of 29.2% [10][15]. - The company has a strong order backlog, with total orders in the electrification business amounting to 11.3 billion USD, a 19% increase from the end of 2023 [25]. Market Trends - The company is expected to benefit from trends in re-industrialization, electrification, and energy transition, particularly in North America and Europe [2][25]. - The demand for data centers and grid construction is anticipated to drive growth in the company's order and performance [2][25].