Eaton (ETN) Hits 52-Week High: What's Driving the Stock?

Eaton CorporationETN hit a new 52-week high of $74.53 on Mar 30, before closing the trading session a tad lower at $74.20. The stock has delivered a one-year return of about 16.5%, while the S&P 500 gained 13.4% over the same time frame.

Over the past 52 weeks, Eaton's share price has ranged from a low of $54.30 to a high of $74.53. Average volume of shares traded over the last three months is approximately 2.23 million.

Factors that Back the Rise

Eaton has been a consistent performer and reported positive earnings surprise in the last four quarters, resulting in a positive average surprise of 1.56%. The long-term earnings growth of the company is projected to be 8.82%.

Eaton supplies its products to around 175 countries. This, in a sense, provides stability to the company's revenue generation ability, as the loss of a single customer will not have any significant impact on revenues and margins. Moreover, a diversified product portfolio offering energy efficient solutions helps to serve a wide customer base.

Eaton Corporation, PLC Price and Consensus

Eaton Corporation, PLC Price and Consensus | Eaton Corporation, PLC Quote

Eaton has been investing consistently in its R&D programs to introduce new products, including power management solutions which will reduce energy consumption and carbon emissions. It has also been upgrading the existing systems to maintain its strong position in the global markets.

To cope with the challenging environment, Eaton has planned a restructuring program, which aims to lower fixed structural costs and entail cost savings. Benefits of restructuring activities have encouraged the company to expand the program. Eaton has plans to invest $440 million in restructuring program during 2015-2018, which is expected to create a cumulative benefit of $518 million. Due to its restructuring initiatives, Eaton's consolidated operating margin is expected improve in the range of 15.5-16.1% in 2017.

Thanks to the positive development, the Zacks Consensus Estimate for 2017 and 2018 moved up by 1.8% and 1.2%, respectively in last 60 days. Estimates for 2017 and 2018 are presently pegged at $4.42 and $4.92, respectively.

Price Movement

In the last six months, Eaton's shares returned 12.7%, outperforming the Zacks categorized Manufacturing - Electronics industry's increase of 8.1%.

Eaton continues to generate a stable cash inflow through its proficient handling of operating activities. Utilizing this capability, Eaton plans to buy back shares worth $3 billion from 2015 through 2018, with $730 million buyback already complete in 2016. The company aims to buy back shares worth $750 million in 2017.

Emerson Electric Co. EMR and SPX FLOW, Inc. FLOW , operating in the industry returned 10.8% and 10.9%, respectively in the last six months, outpacing the industry gain.

Zacks Rank & Other Picks

Eaton currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Enersys ENS , currently having a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Enersys reported positive earnings surprise in the last four quarters, resulting in an average surprise of 4.39%. The Zacks Consensus Estimate for 2017 moved up by 1.7% to $4.68 per share in the last 60 days.

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SPX FLOW, Inc. (FLOW): Free Stock Analysis Report

Emerson Electric Company (EMR): Free Stock Analysis Report

Eaton Corporation, PLC (ETN): Free Stock Analysis Report

Enersys (ENS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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