ENT - Embedded Expectations Analysis - 218 10 26
Eaton Corporation plc (ETN:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 14.1x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about re-entering the M&A market, capacity constraints in their Electrical Systems segment, and lighting strategiesSpecifically, management may lack confidence in their ability to mitigate tariff headwinds, and may be exaggerating their expectations for material margin growth in H2 2018. Additionally, they may lack confidence in their ability to maintain their organic sales growth going forward, and may be concerned about the reduction of orders in Europe. Also, they may be concerned about their lighting business, and may lack confidence in their current strategies in lighting. Moreover, they may be concerned that their Electrical Systems margins will be under pressure going forward, and about capacity constraints in the segment. Also, they may lack confidence in their ability to evaluate M&A opportunities with discipline, and to re-enter the M&A market from a cash standpoint
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