Eaton Corporation Achieves Record Earnings per Share in Q4 2024
Eaton Corporation plc (NYSE: ETN), a leader in intelligent power management, has announced robust results for the fourth quarter of 2024. The company reported earnings per share of $2.45, marking a record for the quarter and reflecting a 4% increase compared to the same period in 2023. Excluding certain charges, adjusted earnings per share reached $2.83, an 11% rise over the previous year. These figures highlight Eaton’s continued strong performance and ability to meet its commitments despite challenging market conditions.
Eaton Reports EPS Beat in Q4, Falls Short of Revenue Expectations
Sales for the quarter amounted to $6.2 billion, another record, and represented a 5% increase over the fourth quarter of 2023. The positive sales growth was primarily driven by a 6% rise in organic sales, partially offset by a 1% negative impact from currency translation. However, the company faced some headwinds, including disruptions from Hurricane Helene and labor strikes in the aerospace sector, which collectively impacted sales by approximately $80 million, or 130 basis points.
Segment margins also reached new heights at 24.7%, a 190-basis point improvement over the same quarter last year. This achievement surpassed the high end of Eaton’s guidance range, showcasing the company’s operational efficiency and strategic execution. Operating cash flow increased to $1.6 billion, while free cash flow rose to $1.3 billion, both setting new records and underscoring Eaton’s financial strength and ability to generate cash.
Eaton’s fourth quarter performance exceeded market expectations. Analysts had anticipated earnings per share of $1.77 and revenue of $85.35 billion. The actual earnings per share of $2.45 ($2.83 adjusted) and revenue of $6.2 billion significantly outperformed these forecasts, reflecting Eaton’s ability to navigate market challenges and capitalize on growth opportunities. The strong results were supported by robust demand across various segments, particularly in the Electrical Americas and Aerospace divisions.
Electrical Americas reported sales of $2.9 billion, a 9% increase from the prior year, driven entirely by organic growth. Operating profits in this segment rose by 20%, with margins reaching a record 31.6%. The Aerospace segment also posted impressive results, with sales climbing to $971 million, a 9% increase, and operating profits rising by 11%. These outcomes underscore Eaton’s strategic focus on high-growth areas and its successful execution of operational improvements.
Despite facing some challenges in the Vehicle and eMobility segments, where sales declined by 10% and 11% respectively, Eaton’s overall performance remained strong. The company’s ability to offset these declines with gains in other segments highlights its diversified portfolio and strategic resilience. The strong growth in orders and backlog, particularly in the Electrical and Aerospace segments, further supports Eaton’s positive outlook.
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Eaton Expects Organic Growth in the Range of 7% to 9% for Full Year 2025
Looking ahead, Eaton has issued optimistic guidance for the full year 2025. The company expects organic growth to range between 7% and 9%, driven by continued demand and strategic initiatives. Segment margins are projected to be between 24.4% and 24.8%, indicating ongoing operational efficiency and cost management. Earnings per share are anticipated to be between $10.60 and $11.00, representing a 14% increase at the midpoint compared to 2024.
Adjusted earnings per share are forecasted to range from $11.80 to $12.20, reflecting an 11% increase at the midpoint. For the first quarter of 2025, Eaton anticipates earnings per share between $2.30 and $2.40, with adjusted earnings per share between $2.65 and $2.75. The company expects organic growth of 5.5% to 7.5% for the quarter, supported by strong order activity and backlog levels.
Craig Arnold, Eaton’s chairman and CEO, expressed confidence in the company’s ability to maintain its momentum into 2025. He highlighted Eaton’s unique position to deliver differentiated performance amid powerful market trends.
Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.