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Realistic Expectations And Improving Performance At Eaton

Based on fourth quarter results, I would argue that Eaton (ETN) belongs on that list of diversified industrials that are doing pretty well given the circumstances (a list that includes 3M (MMM), Honeywell (HON), and arguably Parker-Hannifin (PH)). The company's exposure to off-road vehicles and oil/gas will be liabilities in 2015, but exposure to aerospace and vehicles should offset it and Eaton's leverage to construction should also be a net positive.

I don't expect to find large, well-covered stocks like Eaton trading at major discounts to fair value and I don't believe that is the case here. That said, I like Eaton's prospects for "self-help" through margin leverage and asset leverage and I think these shares are slightly undervalued today.

Not A Perfect Quarter, But Still Fairly Solid

It feels like achieving (or missing) a core growth rate of 4% is the important benchmark this quarter, and Eaton was one… Read More …