A Slimmer, Trimmer Eaton For The Downturn

Eaton’s (ETN) management has been busy – selling the largely disliked (at least by the Street) lighting and hydraulics businesses, buying an aircraft connectors business, and reprioritizing around long-term drivers like electrification (including smart grid, automation, and electric vehicles) and air travel growth. None of that immunizes Eaton to the current downturn, but it does give Eaton a less-cyclical, higher-margin business to take into the recovery.

Eaton has continued to outperform, and I can’t say the shares are dramatically undervalued. They are, however, priced pretty well in the context of quality industrials, and in my mind they’re sitting right on that “buy/hold-and-buy-more-on-a-pullback” line. With opportunities to bulk up the electrification, EV, and aerospace businesses even further through M&A, this is a company I still like in the multi-industrial space.

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A Slimmer, Trimmer Eaton For The Downturn