This hasn't been a quarter of good news for the industrial sector, and Eaton (NYSE:ETN)
is no exception in that regard. In addition to a worsening short-cycle
industrial environment and worries about the health of capital
investment in China and auto/truck assembly in the Western hemisphere,
there are real challenges in hydraulics and reason for concern in the
company's Electrical Products margin structure.
The other thing
that worries me about Eaton today is the announcement of another
restructuring program that seems (to me, at least) to hint that this is
not a lull in the company's end-markets, but potentially a longer
downturn. Eaton does look undervalued today, but I have some concerns as
to whether the company can meet my FCF margin improvement targets. General Electric (NYSE:GE) and Honeywell (NYSE:HON) seem like safer picks relatively speaking, but Eaton does still hold some appeal.
Continue here:
Eaton Seeing The Headwinds Blowing Harder
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