Eaton Earnings: Strong Period Prompts Increase in Guidance

Narrow-moat-rated Eaton turned in solid first-quarter results on the back of another strong performance in the electrical Americas segment, beating FactSet consensus estimates for revenue and earnings per share. Consolidated revenue grew an organic 8% to $5.9 billion, and adjusted EPS grew 28% to $2.40 per share. Segment operating margin also expanded 340 basis points to 23.1% for the quarter. As a result, management stepped up its full-year consolidated guidance to include organic growth of 7%-9% and an operating margin of 22.8%-23.2%. After revising our outlook for margins and regional share in the electrical segment, we have raised our fair value estimate to $225 per share from $220.