4. Eaton (ETN) is a power-management company, building electrical distribution and control products as well as filtration and hydraulic systems and powertrain systems, clutches and brakes.
Eaton has a market value of $18 billion. Its fourth-quarter adjusted earnings stretched 25% to $1.69, outperforming researchers' consensus estimate by 1.1%, a narrow beat. Its sales, up 17%, beat the consensus by 0.9%. It seems as though analysts have a grasp on Eaton's growth trajectory, given precise quarterly forecasts. Goldman disagrees.
Calling the quarter "unspectacular", it believes that analysts will be forced to upwardly revise their earnings estimates in the weeks ahead, boosting Eaton's stock. Among the most bullish on the Cleveland-based industrial company, Goldman even sees significant upside to its own $132 price target. Eaton offers "late-cycle exposure to non-residential construction, energy and aerospace markets", so is ideally-suited to outperform as the economic cycle matures. Currently, nine analysts rate Eaton's stock "buy" and 11 rank it "hold." No analysts rate the shares "sell."Goldman offers the highest target on Wall Street. Eaton is attractive based on its valuation. The stock has advanced 78% in the past 12 months, but costs just 12-times forward earnings, 2.5-times book value and 1.3-times sales. Those multiples reflect discounts of 32%, 36% and 19% to industry averages. Eaton pays a quarterly dividend of 68 cents, equal to a yield of 2.5% and a safe payout ratio of 43%. The dividend has grown 17% in 12 months. It has expanded 9.3% and 13%, annually, over a three- and five-year span.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV