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Eaton Corporation ETN shares are trading at a premium compared to the Zacks Manufacturing-Electronics industry. Its forward 12-month Price/Earnings of 22.57X is higher than the broader sector’s 18.39X and the Manufacturing-Electronics Industry’s 21.35X.
Eaton’s near-term prospects look bright, given its VGM Score of B. Stocks with a high VGM Score have the most attractive value, best growth and most promising momentum compared with peers.
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Eaton’s high-quality product offerings, global presence, and consistent R&D expenditures allow the company to create sustainable products. These enable the company to provide efficient power management solutions to its clients. Strong demand for its products also enables the company to deliver strong results quarter after quarter.
ETN surpassed expectations in the last four quarters, with an average earnings surprise of 3.63%, courtesy of solid financial and operational performance from most of its segments.
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Factors Contributing to Eaton’s Stable Performance
Reindustrialization and megatrends worldwide create fresh demand for Eaton’s efficient power management products. Eaton continues to receive orders from its customers across the globe and register an increase in the backlog. Courtesy of ongoing orders, Eaton’s backlog increased 29%, 16% and 16% in Electrical Americas, Aerospace and Electric Global, respectively, on a rolling 12-month basis.
ETN completed two acquisitions in the first half of 2024, further strengthening its Electrical Americas and Electrical Global segment. Currently, demand for the electric vehicle (EV) charging infrastructure is on the rise globally and Eaton’s expertise can help it grab a larger market share in the fast-expanding EV charging business.
Eaton’s products are supplied to around 160 countries, which provides stability to the revenue generation ability of the company. This way the loss of a customer does not have any significant impact on revenues and margins. Its diversified product portfolio offering energy-efficient solutions will help to serve a broad customer base. Ongoing improvement in end-market conditions has been boosting orders and revenues.
Eaton’s approach to R&D is focused on leveraging technology to design solutions that meet the needs of its customers today and into the future. Advance product development and upgrade of existing products allow ETN to maintain a strong position in different markets and countries it supplies its products to.
The new AI training data centers, which require both high power and density, are creating a new opportunity for growth for this power management company. Eaton is strengthening its participation across the entire electrical power value chain and benefiting from momentum in data center and utility end markets, as well as the growth cycle in the commercial aerospace and defense markets.