瑞银称伊顿二季度业绩超预期并上调全年指引，但该催化已被系统处理且股价已反应

We would expect Eaton shares to be up today following beat in the quarter and guidance raise. Results were largely consistent with our positive preview. Operating profit was 8% ahead of Street expectations, driven by better sales and margin expectations across Electrical segments. Importantly, incremental operating margin in Electrical Americas improved to high teens vs just 3% in the last quarter, leading to segment margin coming in 60bps ahead of expectations. While this is still relatively low compared to the strong growth, we believe it shows improving momentum which should continue over the next few quarters. Moreover, Electrical global showed strong organic sales acceleration in the quarter along with backlog which is more than 2x from a year ago.
The company raised its full year organic sales growth expectation to +12% (from +10% before), while margin expectations were maintained. The full year margin guidance implies a big ramp in 2H towards 32% in 4Q...confidence on this recovery will be important. Full year EPS guidance is now $13.50, 2% ahead of prior and 1% above consensus estimates. Guidance for 3Q was placed at $3.51 at the midpoint, which is largely in line with the consensus. We estimate orders in EA in the quarter at $4.6 billion, which is solid but slightly lower sequentially. Net/net we’d expect a recovery in shares with today’s results after the recent move lower. Conf. call is at 11am ET.
Company Description
Eaton provides energy efficient solutions to assist customers in effectively managing electrical and mechanical power more reliably, safely, and sustainably. It operates in five business segments: Electrical Americas, Electrical Global, Aerospace, Vehicle, and eMobility.
Valuation Method and Risk Statement
Our price target is based on forward P/E.
Risk Statement: The Electrical Equipment and Multi Industry sector faces a broad range of cyclical risks with exposure to the underlying cycles inherent in everything from aviation, auto, trucking and trains to construction and consumer electronics to mining, power, oil and gas and more depending on the specific stock. EEMI companies are subject to risks associated with unexpected changes in the underlying global macro environment, currency and interest rate movements, commodity price inflation as well as company-specific execution, M&A, integration, labor relations and changes in the competitive or regulatory environment. These changes can be in the form of product technology, e-commerce and other digital disruption and/or channel disintermediation. Capacity and related pricing pressures are also a risk through the cycle. Finally, these multinational companies are subject to policy changes taking place in the United States and internationally, including those related to environmental regulation and tariffs.
Company specific risks include slowing growth and misexecution as management invests in additional capacity to execute on growth.