NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- EATON CORP has improved earnings per share by 9.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EATON CORP increased its bottom line by earning $3.94 versus $2.72 in the prior year. This year, the market expects an improvement in earnings ($4.46 versus $3.94).
- ETN's revenue growth trails the industry average of 16.7%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has significantly increased by 67.76% to -$98.00 million when compared to the same quarter last year. In addition, EATON CORP has also vastly surpassed the industry average cash flow growth rate of -66.36%.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems.
Eaton Corporation operates as a diversified power management company worldwide. The company has a P/E ratio of 10, equal to the average industrial industry P/E ratioand below the S&P 500 P/E ratio of 17.7. Eaton has a market cap of $13.47 billion and is part of the
industry. Shares are down 8.3% year to date as of the close of trading on Wednesday.
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--Written by a member of TheStreet Ratings Staff.
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.