Despite the impressive numbers, Eaton trimmed its outlook for 2013 primarily due to the NAFTA Class 8 truck market and the persistent weakness in the hydraulics markets. Investors, however, maintain their upbeat outlook on this company, clearly looking at the long-term potential of Eaton. The sunnier outlook of investors is helping shares gain more than 4% on the earnings day. Investors are looking at Eaton's 3% organic growth and its 7% increase in bookings. These numbers -- along with management's positive outlook on the end market, raising the forecast from flat to up 3% to 4% in 2014 -- may have boosted investors' confidence to a level that made the lower outlook for 2013 seem like a passing affair.
Net sales reached an all-time high of $5.61 billion, 42% above the $3.95 billion during the same period last year. Attributable net income surged significantly to $510 million or $1.07 per diluted share from $345 million or $1.02 per share in the corresponding quarter of 2012. Eaton performed better in the third quarter on the back of the acquisition of Cooper Industries CBE.
Strength in Diversity
In fiscal 2014, the company expects 3% to 4% growth in its market, getting a significant boost from the electrical and hydraulic system sectors, which were impressively profitable in the third quarter. Europe and the United States are gradually moving into a growth zone, which will only serve to benefit the company. Along with those two regions, Latin America and Asia are also showing promising growth opportunities in these sectors.
Eaton recently declared a quarterly dividend of $0.42 per share, or $1.68 annualized, payable on November 22, 2013, to stockholders on record as of November 4, 2013. This sizable dividend is a very attractive lure to investors looking to get into this sector with a reasonably priced stock.
Rivals ITT CorpITTFinal Word
Overall, Eaton Corporation looks poised to grow, and will offer increased value to shareholders, as the company has a five-year average dividend rate of 3.10% with a payout ratio of 49.00%. Long term, Eaton looks like a great option for investors looking to hold on to a stock for a while and get a nice dividend payout every year. My bet is that Eaton's performance will continue to impress investors and exceed analysts expectations.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga.© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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