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Eaton (ETN) Q4 Earnings Surpass Estimates, Revenues Up Y/Y

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Eaton Corporation (ETN - Free Report) reported fourth-quarter 2021 earnings of $1.72 per share, which surpassed the Zacks Consensus Estimate of $1.71 by 0.6%. Furthermore, earnings were up 18.6% year over year.

GAAP earnings for the reported quarter were $1.37 per share compared with $1.18 in the year-ago period. The difference between GAAP and operating earnings for the reported quarter was due to charges of 23 cents associated with intangible amortization, 3 cents related to a multi-year restructuring program, and 9 cents pertaining to acquisitions and divestitures.

Revenues

Total quarterly revenues came in at $4,798 million, which missed the Zacks Consensus Estimate of $4,904 million by 2.2%. Total revenues, however, improved 2.4% from the year-ago quarter.

The year-over-year improvement is due to 6% growth in organic sales and 7% growth from acquisitions, offset by 1% negative currency translation and 10% decline due to the Hydraulics business divestiture.

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC Price, Consensus and EPS Surprise

Eaton Corporation, PLC price-consensus-eps-surprise-chart | Eaton Corporation, PLC Quote

Segment Details

Electrical Americas’ total fourth-quarter sales were $1,917 million, up 12.6% from the year-ago level. This improvement was due to improved organic sales and contribution from the acquisition of Tripp Lite. Operating profits were $368 million, up 3% year over year.

Electrical Global’s total sales were $1,424 million, up 13.7% from the year-ago quarter. Organic sales were up 15% from the year-ago quarter, offset by negative currency translation of 1%. Operating profits were $277 million, up 33% year over year.

Aerospace’s total sales were $759 million, up 40% from the year-ago quarter. This was due to improved organic sales and contribution from the acquisition of Cobham Mission Systems, marginally offset by negative currency translation. Operating profits were $189 million, up 91% year over year.

Vehicle total sales were $610 million, down 2% from the year-ago quarter due to a drop in organic sales and negative currency translation. Operating profits were $100 million, down 3% year over year.

eMobility segment’s total sales were $88 million, up 4% year over year due to an improvement in organic sales.

Highlights of the Release

Selling and administrative expenses were $751 million, down 1.8% from the year-ago quarter.

ETN’s fourth-quarter research and development expenses were $162 million, up 15.7% from the prior-year period. Interest expenses for the quarter were $74 million, down 3.9% from the year-ago period.

Orders in Electrical Americas, Electrical Global, and Aerospace were up 20%, 22%, and 19% year over year, respectively.

Financial Update

Eaton’s cash was $297 million as of Dec 31, 2021 compared with $438 million on Dec 31, 2020.

As of Dec 31, 2021, the company’s long-term debt was $6,831 million, down from $7,010 million on Dec 31, 2020.

For the fourth quarter, adjusted operating cash flow was $856 million and free cash flow totaled $693 million.

Guidance

Eaton’s first-quarter 2022 earnings are expected in the range of $1.55-$1.65 per share. It now expects organic revenue growth in the range of 7-9% for the first quarter.

Eaton expects 2022 earnings per share in the range of $7.30-$7.70. ETN now expects organic revenue growth in the range of 7-9% for 2022. Segment operating margin for 2022 is now expected in the range of 19.9-20.3%.

Eaton is targeting share buyback in the range of $200-$300 million in 2022.

Zacks Rank

Currently, Eaton has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Emerson’s long-term (three to five years) earnings growth is pegged at 8.7%. The Zacks Consensus Estimate for EMR’s fiscal 2022 earnings per share indicates 19.8% year-over-year growth.

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