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Eaton Corporation (ETN) for Income and Appreciation

Nov 01 2010

Eaton Corporation (ETN) for Income and Appreciation

The Eaton Corporation headquartered in Cleveland Ohio is a power management company with facilities in North America, Europe and Asia primarily. The company is currently valued at $15 Billion base on its stock recent price. Offering a dividend of 2.32 a share or a yield of 2.6% makes the stock attractive to income seekers in addition to capital appreciation investors.

The company’s stock recently reach a new 52-week high after the company announced the results of their most recent quarter. The company beat earnings expectations by 16% roughly, making $1.60 a share while analysts were expecting $1.38 a share. The company has now beat earnings expectations their last four quarters.

Sales have also shown nice growth with quarterly growth expected to be 15% for the last quarter of the year compared to the same period a year ago. The price to earnings ratio (P/E) is just shy of 16 which makes the PEG ration 1.5. This is a little higher than desired by with growth at 22.2% for the next quarter, paying a premium for the growth could be acceptable.

In a recent Investopedia story, the current rebound in heavy industry and electronics was outlined as an area of growth for the economy. Companies such as Eaton, Dover (DOV) and Ingersoll Rand (IR) were outlined due to their good quarters and sold growth internationally.

Options are thinly traded for the stock so owning shares is the best way to create a position. And with the chart receiving a buy signal within the past couple of trading days, this could be a good time to purchase shares on weakness.

Eaton Corporation

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