Eaton delivered an excellent quarter on Tuesday, giving shares of the artificial intelligence buildout winner a much-needed jolt. The results and outlook demonstrated why we've stuck with the stock despite a turbulent period for the AI trade. Revenue for the third quarter ended Sept. 30 increased 28% year-over-year to a record $8.95 billion, ahead of the LSEG consensus estimate of $8.51 billion. Adjusted earnings per share (EPS) rose 20% to $3.68 apiece. That's better than the $3.54 expected, according to LSEG. Shares are up almost 7% in afternoon trading to $391 and change, though they remain well below their August closing high of roughly $460. With Eaton reporting a clean beat-and-raise, how the stock trades into the close and in the coming days represents something of a referendum on the data center trade, especially once the results of Tuesday's midterm election are behind us. ETN YTD mountain Eaton's year-to-date stock performance. Bottom line The electrical equipment supplier turned in a very strong quarter that should help solidify a bottom in the stock — assuming we don't see a renewed, broad-based…
Eaton's strong quarter should mark a bottom for shares of the AI buildout winner
In short
Eaton achieved record third-quarter revenue of $8.95 billion alongside adjusted earnings per share of $3.68, sending its stock up nearly 7% past $391. Performance was largely fueled by a 65% surge in the artificial intelligence and data center divisions, with its acquired Boyd Thermal liquid-cooling business experiencing nearly triple-digit growth. Management raised full-year targets for both organic revenue and adjusted earnings, while projecting that zero company end markets will decline in 2027. To further prioritize these high-growth sectors, the company will spin off its Mobility division early next year.
Key points
- The planned separation of the Mobility unit early next year will concentrate Eaton's port…: The planned separation of the Mobility unit early next year will concentrate Eaton's portfolio on its fastest-growing commercial markets.
- Management expects none of its end markets to decline in 2027, with strong double-digit g…: Management expects none of its end markets to decline in 2027, with strong double-digit growth anticipated in data centers, distributed IT, and commercial aerospace.
- Liquid-cooling provider Boyd Thermal prompted Eaton to increase the division's full-year…: Liquid-cooling provider Boyd Thermal prompted Eaton to increase the division's full-year outlook to $1.9 billion following nearly triple-digit quarterly growth.