Eaton reports mixed Q3 results, exceeding profit expectations, optimistic outlook on data center growth

From CNBC: 2024-10-31 13:33:07

Eaton reported mixed third-quarter results with revenue increasing over 8% year over year to $6.35 billion, just below analyst estimates. Adjusted earnings per share rose 15% to $2.84, surpassing expectations. Management attributed a revenue headwind to Hurricane Helene and the Boeing strike. The company raised full-year guidance but provided a mixed outlook for the fourth quarter.

Despite the revenue miss, Eaton’s profitability exceeded expectations, driven by strong performance in its Electrical Americas and Electrical Global segments. The company has exposure to key mega-trends like electrification and infrastructure spending. Management highlighted growth opportunities in data centers and generative AI, supporting a positive long-term outlook.

Eaton provided details on North American megaprojects, with a backlog of planned projects totaling about $1.8 trillion. The company has secured contracts for projects valued at over $1.7 billion, with a win rate of nearly 40%. Looking ahead to 2025, Eaton expects strong growth in key end markets like data centers, commercial aerospace, and electric vehicles, with an overall market share growth of 6% to 8%.

Guidance for full-year segment operating margins and adjusted EPS was raised, exceeding consensus estimates. The company expects organic sales growth of 8% to 9% for the full year but lowered expectations for Q4 organic revenue growth. Looking to 2025, Eaton anticipates strong growth in data centers and distributed IT, while commercial vehicles are expected to decline. Capital spending is projected to be between $900 million and $1 billion.



Read more at CNBC:: We’re hiking our price target on Eaton whose earnings benefit from AI data center boom