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Eaton

ETN strengthened its position as a leader in the global power management business with Cooper. The acquisition was complimentary in nature and had little overlap allowing ETN to broaden its offerings across the entire power system. Eaton's 2017 revenue is balanced between the U.S. (55%) and non-U.S. (45%). Eaton has five operating segments: Electrical Products (35% of FY17 sales), followed by Electrical Systems and Services at (28%), Vehicles (16%), Hydraulics (12%), and Aerospace (9%). Eaton saw higher operating margins in Aerospace (19.0% FY17), Electrical Products (17.9%), and Vehicle segments (16.1%), while Electrical Systems and Services (13.6%) and Hydraulics (11.7%) lag behind. Long time CEO Alexander Cutler stepped down May 2016, with Craig Arnold replacing him. Arnold had been vice chairman and COO in the industrials sector since 2009. (02 Apr 2018)

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August 2018 US Company Recommendation Changes

US Company Recommendation Changes: 02 Sep 2018, 9:49 PM ET - Our monthly report provides executive summaries for the thirty company recommendation changes made on North American companies during the month of August.

Industrials 2Q18 Review: Tariffs Tame for Now

Sector Analysis: 07 Aug 2018, 4:43 AM ET - It was a strong 2Q18 earnings season for our Industrial credits. We share the salient takeaways and touch on hot button topics such as end-market trends, tariffs and event risk.
Focused

Eaton: 2Q18 | Shifting to Market perform

Worth Watching: 31 Jul 2018, 10:17 PM ET - Eaton (Baa1/A-) exceeded expectations in its second quarter, delivering a strong performance with growth across each of its segments. Net sales reached $5.5 bn, up 7% YoY, pushing EPS beyond the high end of prior guidance range to $1.39 (+21%). ..

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.
Focused

Eaton: EPG Conference Highlights

Worth Watching: 07 Jun 2018, 2:42 PM ET - Eaton (Baa1/A-): In addition to discussing key macro takeaways from the EPG conference at the end of May and featuring more than fifteen other Industrial credits in our sector report, we note that two of the primary highlights of CEO Craig Arn ..
Focused

US Industrials: EPG Conference | Macro to Micro

Sector Analysis: 29 May 2018, 4:47 AM ET - We attended the 3-day Electrical Products Group conference in FL last week, which featured a host of Industrial firms. The macro and end-market tone was distinctly positive.  In this report we highlight key takeaways on over 15 credits.
Focused

Eaton: 1Q18 | Under the Microscope

Earnings Note: 01 May 2018, 10:42 PM ET - Eaton reported better than expected results and guidance was lifted. However, capital allocation plans and the current portfolio structure were challenged in light of the firm’s uninspiring stock returns. We maintain our U/P.  

Parker: 3Q18 | Shifting to Market perform

Earnings Note: 26 Apr 2018, 9:13 PM ET - PH’s earnings were strong, but with the equity now under pressure and debt reduction plans nearing completion we anticipate a capital allocation change soon. We take our Outperform on the credit to a Market perform.
Focused

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.

US Strategy: Tariffs as Repricing Event?

Strategy Analysis: 01 Mar 2018, 9:40 PM ET - The market has been building in very low odds of a trade war event, a NAFTA withdrawal, or a significant escalation of tit-for-tat trade retaliations on a broader scale.  The odds-makers just got a fresh load of input.

Section 232: The NAFTA Conundrum

Sector Analysis: 26 Feb 2018, 3:42 AM ET - Using Section 232 on Steel/Aluminum could damage supplier chains and cost structures and drive broader inflation.  A tariff gambit in such key industries could undermine the NAFTA negotiations and have immediate effects on risk pricing. 

CNHI 4Q17: Supportive Positive Trends

Earnings Note: 31 Jan 2018, 9:11 AM ET - CNHI reported results highlighting positive trends in end-market demand which contributed to better operating performance. Credit metrics continue to strengthen at the Capital Goods bellwether and we maintain our O/P on CNHI bonds.

US Industrial 2018 Outlook: Conglomerate Conundrum

Sector Analysis: 21 Jan 2018, 9:58 PM ET - Against the backdrop of a generally favorable global demand environment, event risk is the key 2018 credit concern for the conglomerate peer group. We focus on this topic and revisit our credit recommendations for more than two dozen firms.

CNH Industrial: Issuing New 10Y US$ Bonds

Worth Watching: 09 Nov 2017, 1:23 PM ET - CNH Industrial is issuing new 10-year US dollar bonds out of the CNH Industrial N.V. (parent) entity. CNH Industrial has one other US$ bond outstanding at the parent level, the 4.5% 8/2023 bond (Ba2/BBB -/BBB-), which trades at a spread of G+12 ..

Caterpillar: 3Q17 | Knocks the Cover off the Ball

Earnings Note: 24 Oct 2017, 8:11 PM ET - Caterpillar’s earning trajectory has been on a favorable trend line in 2017 and the trend continued into the third quarter with a set of strong results. The quarter did not change our view of the credit and we remain at a Market perform.

Eaton: Refi-led Debt Issuance | Pass

IG Note: 06 Sep 2017, 11:21 AM ET - We remain guarded around event risk at Eaton and recommend that investors await better entry points into the credit.

Multi-Industrials: 2Q Review, Event Risk & More

Sector Analysis: 21 Aug 2017, 10:17 PM ET - In this report we broadly review earnings trends for nearly two dozen industrial credits, discuss companies with elevated event risk and also highlight new issuance candidates.

Rental Cases: URI M&A Stays Hot, H&E Misses

Sector Analysis: 17 Aug 2017, 12:01 PM ET - Rentals activity stays hot as favorable secular trends, consolidation of a fragmented industry, and a waiting game for tax reform and infrastructure details remains the order of the day. URI stays true to its history of M&A focus.
Focused

Industrials Earnings Blitz: ETN, EMR, XYL

Earnings Note: 01 Aug 2017, 1:51 PM ET - In this earning blitz, we highlight the key takeaways from earnings releases across the Industrials today that include Eaton, Emerson Electric, and Xylem

CAT: 2Q17 | Starting to Fly; Moving to M/P

Earnings Note: 25 Jul 2017, 9:19 PM ET - Caterpillar delivered another round of strong results. With end-markets starting to turn, results gaining traction, and balance sheet options on the mend, we move from an Underperform to a Market perform on the credit.

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