Analyst Note| Joshua Aguilar |
After reviewing narrow-moat-rated Eaton’s second-quarter earnings, we raise our fair value estimate to $132 from $125 previously. The raise is relatively in line with the stock’s price action on the trading day when excluding the catch-up effect of time value of money in our model update. While we were correct in modeling greater than the top end of the EPS guide for the second quarter, we nonetheless still fell short in our assessment and therefore raised our assumptions. The primary source of the variance from our prior projections was greater than expected reported revenue growth, mostly on the inorganic front, though better than expected operating margins were also a contributor.