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Sunday, January 30, 2011

Eaton Corp Q4 Profit Beats View; Boosts Dividend; Announces 2-for-1 Split (ETN)

Diversified power management specialist Eaton Corporation (ETN) on Thursday posted better-than-expected fourth quarter earnings, raised its dividend payout by 17%, and announced a two-for-one stock split.

The Cleveland-based company reported fourth quarter net income of $280 million, or $1.63 per share, compared with $211 million, or $1.25 per share, in the year-ago period. Excluding items, adjusted profit was $1.69 per share.

Revenue rose 17% from last year to $3.66 billion.

On average, Wall Street analysts expected a smaller profit of $1.67 per share, on lower revenue of $3.63 billion. Looking ahead, the company said it expects full-year 2011 profit to range from $7.00 to $7.60 per share, while analysts currently expect $7.26 for the year.

Separately, the company boosted its quarterly dividend payout by 17%. The new dividend of 68 cents per share (up from 58 cents) will be paid on Feb. 25 to shareholders of record as of Feb. 7. Eaton also announced a two-for-one stock split, which will take place on Feb. 28 for shareholders of record as of Feb. 7. Eaton Corp shares rose 55 cents, or +0.5%, in premarket trading Thursday.

The Bottom Line

We have been recommending shares of Eaton Corp (ETN) since Nov.24, 2010, when the stock was trading at $95.81. The company will now have a 2.60% dividend yield, based on the higher dividend payout and last night’s closing stock price of $104.61.

Disclosure I am long ETN shares.

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