Eaton shares surged Thursday and hit a new all-time high after the electrical power management company reported an upside fourth quarter and provided a bullish view of 2024. We think the stock can keep climbing as the company rides the reindustrialization wave happening across North America. Revenue increased 11% year over year organically to $5.967 billion, beating analyst expectations of $5.911 billion, according to estimates compiled by LSEG. Adjusted earnings-per-share of $2.55 grew about 24% annually, beating out the consensus forecast of $2.47 a share. Segment margin, similar to an adjusted operating income margin, expanded 200 basis points to 22.8%, a new fourth quarter record for the company that exceeded estimates of 22.6% and was above the high end of guidance. Bottom line This quarter cements our thesis that Eaton is one of the big winners from the megatrends that are driving hundreds of billions of dollars of investment. From electrification and the energy transition to digitalization, infrastructure spending, and reindustrialization, more electrical content is needed everywhere, and Eaton is at the center of it all with its leading products and solutions. On top of the strong results, management painted a bullish view of 2024 and beyond, differentiating itself from many other industrials who gave soft, yet conservative outlooks that couldn’t beat the Street. While the macro continues to be murky for many, Eaton has a lot of visibility into growth partly because there has been a significant step up in huge projects happening in North America. According to the company, there has been $933 billion in cumulative megaprojects in North America since January 2021, ranging in all different areas including semiconductor and electric vehicle batteries. Of the 18% that have actually started construction, Eaton has seen a strong win rate of approximately 40% for its electrical equipment. And here’s a fact that’s so interesting: Of its Electrical Americas…
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