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Since Eaton Corporation plc (NYSE:ETN) released its earnings in March 2019, the consensus outlook from analysts appear fairly confident, as a 15% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of 8.5%. Currently with trailing-twelve-month earnings of US$2.1b, we can expect this to reach US$2.5b by 2020. Below is a brief commentary around Eaton’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How will Eaton perform in the near future?
Longer term expectations from the 20 analysts covering ETN’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ETN’s earnings growth over these next few years.
This results in an annual growth rate of 5.9% based on the most recent earnings level of US$2.1b to the final forecast of US$2.7b by 2022. EPS reaches $6.86 in the final year of forecast compared to the current $4.94 EPS today. Margins are currently sitting at 9.9%, which is expected to expand to 12% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Eaton, I’ve compiled three important aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Eaton worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Eaton is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Eaton? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.