Eaton’s Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Eaton (NYSE:ETN) will unveil its latest earnings on Monday, July 23, 2012. Eaton is a power management company offering services in the sectors of electricity, hydraulics, aerospace, truck, and automotive.

Eaton Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of $1.10 per share, a rise of 13.4% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.12. Between one and three months ago, the average estimate was unchanged. It has since dropped over the last month. Analysts are projecting profit to rise by 11.4% versus last year to $4.41.

Past Earnings Performance: Last quarter, the company topped expectations by 2 cents, coming in at profit of 92 cents per share versus a mean estimate of net income of 90 cents per share. This followed two straight quarters of missing estimates.

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Stock Price Performance: Between April 20, 2012 and July 20, 2012, the stock price fell $7.87 (-16.77%), from $46.93 to $39.06. The stock price saw one of its best stretches over the last year between February 2, 2012 and February 9, 2012, when shares rose for six straight days, increasing 5% (+$2.47) over that span. It saw one of its worst periods between May 7, 2012 and May 21, 2012 when shares fell for 11 straight days, dropping 7.7% (-$3.51) over that span.

A Look Back: In the first quarter, profit rose 8.4% to $311 million (91 cents a share) from $287 million (83 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 4.1% to $3.96 billion from $3.8 billion.

Wall St. Revenue Expectations: On average, analysts predict $4.25 billion in revenue this quarter, a rise of 3.9% from the year-ago quarter. Analysts are forecasting total revenue of $16.97 billion for the year, a rise of 5.7% from last year’s revenue of $16.05 billion.

Key Stats:

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 36.2% in the third quarter of the last fiscal year and 29.3% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 21.1% in the second quarter of the last fiscal year, 15.5% in the third quarter of the last fiscal year and 10.1% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

Analyst Ratings: With 12 analysts rating the stock a buy, one rating it a sell and two rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.65 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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