Uptick In Long-Term Secular Growth Rates Will Likely Give Eaton A Boost

Aug. 16, 2022 11:05 AM ETEaton Corporation plc (ETN)1 Comment
Will Hicks profile picture
Will Hicks
45 Followers

Summary

  • Eaton has delivered near-term results above expectations, despite supply chain issues and a looming recession.
  • The company raised guidance marking an inflection point for elevated +9%-12% sales growth and +11%-13% EPS growth.
  • Our three- to five-year price target is $246-$265/share, representing a +13% annualized capital appreciation, and +2.5% yield equals 15.0%-15.5% potential annual return.
  • The stock could have +10%-15% upside from current trading levels to a $160-$170/share range.
  • This quality company has broad-based investment appeal for many types of investors.

Electricity transmission towers with red glowing wires

peterschreiber.media

Co-Authored With Matteo Koulias

Industry Growth Rates Are Strong and Accelerating

Eaton Corporation (NYSE:ETN) is an investment play on accelerating growth trends for electrification, energy transition, and digitalization. ETN is a top holding in the following thematic ETFs: IQ Cleaner Transport ETF (

Electricity Investment Spending Graph

Investment spending in electricity networks, 2016-2020 vs. 2026-2030 in the Net Zero 2050 Scenario ($ Billions) (IEA)

Aerospace CAGR growth graph

United States Aerospace CAGR Growth 2021-2026 (Research and Markets)

defense spending graph

United States Government Defense Spending and Military Aircraft Market CAGR through 2032 (Statista)

electric car sales graph

Electric Car Sales 2010-2030 % Share in the Net Zero Scenario 2050 (IEA)

Q2 Results Eaton Corporation

Q2 2022 Financial Results - Components of Growth (Eaton and Sapling Wealth Management, LLC)

Eaton management sales projections

Management Guidance Increasing in Line with Secular Growth Trends (Eaton)

Projected Sales and Margins Eaton Corporation 2022-2026

Projected Sales and Margins Eaton Corporation 2022-2026 (Sapling Wealth Management, LLC)

EPS and dividend projected growth

Accelerating Sales and Rising Margins Drive Strong EPS & Dividend Growth Prospects (Sapling Wealth Management, LLC)

This article was written by

Will Hicks profile picture
45 Followers
Managing Director, Sapling Wealth Management, LLC, a Seattle-based advisory firm that he founded. Sapling Wealth Management is an independent financial advisory firm offering institutional caliber investment advice to individuals, ERISA plan sponsors and plan participants. Formerly, Will Hicks managed real estate fund and corporate venture capital investments. Prior to this, he worked on Wall Street as a research analyst for Smith Barney and Cowen & Company. While on Wall Street, he earned the recognition as a "All Star" Analyst in health care services from the Wall Street Journal. For more detailed bio information regarding William Hicks, please reference the Investment Adviser Registration Depository.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in ETN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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