Wall Street Targets A 20% Upside For Eaton Corp

This week I'm seeking a prestigious and long-term dividend-paying stock from the industirals business sector. 

That industrials sector includes twenty-three industries all related to designing, fabricating and servicing stuff we know, want and use. The industrials industries range from aerospace and defense to waste management with all the transportation, business services, and equipment required in between. 

Today I'm reviewing a large-cap diversified industrial company, named Eaton Corporation PLC. It's trading ticker symbol is ETN

Eaton Corp PLC is a power management company. It provides energy-efficient solutions that help its customers effectively manage electrical, hydraulic and mechanical power. Eaton’s products include UPS systems, cylinders, circuit breakers, among others.

The company has five segments:

An Electrical Products segment offers electrical and industrial components. 

The company's Electrical Systems and Services segment provides power distribution and assemblies, and more. 

Its Hydraulics segment offers various power products, controls and sensing products, and golf grips. 

The company's Aerospace segment provides hydraulic fluid conveyance products and fuel systems for commercial and military use. 

Its Vehicle segment designs, manufactures, markets, and supplies drivetrain and powertrain systems.

The company serves industrial, institutional, governmental, utility, commercial, residential, information technology, renewable energy, marine, agriculture, oil and gas, construction, mining, forestry, material handling, truck and bus, machine tools, molding, primary metals, and power generation markets, as well as original equipment manufacturers and aftermarket customers of heavy, medium, and light-duty trucks, SUVs, CUVs, passenger cars, and agricultural equipment. 

Eaton Corporation plc was founded in 1916 and is based in Dublin, Ireland.

I use three key data points to gauge the value of any dividend equity or fund like  Eaton Corporation PLC.: 

(1) Price

(2) Dividends

(3) Returns

Besides those three, four more keys will finally unlock an equity or fund in which to invest.

But those first three primary keys, best tell whether a company has made, is making, and will make money. 

ETN Price

Eaton's price per share was $77.29 at Friday's market close. A year ago its price was $78.48 for a price slump of $1.19 per share for the year.  

Assuming Eaton's price will trade in the range of $70 to $100 next year, Eaton's recent $77.29 price could improve to $90.00 by late-October, 2019. 

ETN Dividends

Eaton's most recent quarterly dividend was $0.66 declared July 24th and paid August 17th 

At this most recent $0.66 quarterly rate, Eaton's annual dividend equals $2.64 yielding 3.4% at Friday's closing $77.29 price.

Gains For ETN?

Adding the $2.64 estimated annual dividend to my estimated $12.71 annual price upside for Eaton Corporation PLC makes a $15.35  potential gross annual per share gain, which will be reduced by any costs to trade the shares.  

 A little over $1,000.00 invested today at the $77.29 recent price buys 13 Eaton Corporation PLC shares. 

A $10 broker fee paid half at purchase and half at sale costs $0.77 per share

Subtracting that $0.77 brokerage cost from the estimated $15.35 gross annual gain leaves a net gain of $14.58 X 13 shares 

= $189.54

or a 18.5% net gain on a $1,004.77 investment.

Therefore, Eaton Corporation PLC, whose trading ticker symbol is ETN, now shows a possible 18.5% net gain including a 3.4% dividend yield. 

Twenty-two brokers cover this stock:

Eleven say "buy" ETN.

Three say ETN will "outperform" its peers.

Eight say "hold" ETN.

One says ETN will "underperform" its peers,

One says "sell" it.

Out those varied opinions, the general recommendation number comes up as 2.1 or "outperform".

These twenty-two wizards of wall street reckon a price target $2.00 higher than my estimated $90 result.

So, you could look at these few speculative numbers this way, Eaton Corporation PLC, whose trading ticker symbol is ETN, has made money, is making money, and could net a 18% to 20% net annual gain including a 3.4% dividend yield. It could be more, it could be less.   

The above speculation is based on past year performance. The actual results remain to be seen to determine if Eaton Corporation PLC is worth your time and money.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, ...

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John Hartley 6 years ago Member's comment

Good choice.