Eaton Corporation PLC Stock Buy Recommendation Reiterated (ETN)

Editor's Note: 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.

NEW YORK ( TheStreet) -- Eaton Corporation (NYSE: ETN) 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 attractive valuation levels, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass

Highlights from the ratings report include:
  • EATON CORP PLC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EATON CORP PLC increased its bottom line by earning $3.94 versus $2.72 in the prior year. This year, the market expects an improvement in earnings ($4.10 versus $3.94).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The current debt-to-equity ratio, 0.50, 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 1.00 is somewhat weak and could be cause for future problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electrical Equipment industry and the overall market on the basis of return on equity, EATON CORP PLC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

Eaton Corporation operates as a diversified power management company worldwide. Eaton has a market cap of $19.05 billion and is part of the industrial goods sector and industrial industry. The company has a P/E ratio of 13.7, below the S&P 500 P/E ratio of 17.7. Shares are up 4% year to date as of the close of trading on Friday.

You can view the full Eaton Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

HOLIDAY SPECIAL: Let Jim Cramer show you every trade he is making in his $2.5 Million portfolio. Join now for 14-days FREE. Sign up today to get e-mail alerts before every trade
null

If you liked this article you might like

Fight Off Complacency: Cramer's 'Mad Money' Recap (Fri 9/15/17)

Cramer: Another Reason to Be Skeptical of the Government

The Industrial Renaissance Is Upon Us -- Jim Cramer Reveals How to Play It

Blue Apron, Philip Morris, Honeywell, Becton Dickinson: 'Mad Money' Lightning Round

Buy These High-Octane Stocks on a Dip: Cramer's 'Mad Money' Recap (Monday 8/7/17)