ETN - Embedded Expectations Analysis - 2020 09 25
Eaton Corporation plc (ETN:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 24.9x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may be concerned about free cash flow guidance, restructuring cost management, and the coronavirus impactSpecifically, management may lack confidence in their ability to meet their free cash flow guidance, achieve their 2020 share buyback target, and continue creating value for customers. Furthermore, they may be exaggerating the number of companies expanding office space and their commitment to supporting the environment and they may be downplaying concerns about supply chain disruptions during the pandemic. In addition, management may lack confidence in their ability to manage restructuring costs, grow organic revenue, and mitigate operating margin declines. Moreover, they may have concerns about macro pressures on their markets and the recovery of the U.S. economy. Finally, they may lack confidence in their stated belief that Q4 will be stronger than Q3 barring a second wave of coronavirus
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.