Eaton Acquires Wright Line - Analyst Blog

Electrical equipment maker Eaton Corporation (ETN) announced the completion of its acquisition of Wright Line Holding Inc. The company had agreed to acquire Worcester-based Wright Line on Aug 4, 2010.

Maker of information technology equipment, Wright Line’s sales were roughly $101 million for the 12 months ended Jun 30, 2010. The company provides customized enclosures, rack systems, and air flow management systems to store, power, and secure mission-critical IT data center electronics.

Bringing together Wright Line’s strong enclosure and air management portfolio, and Eaton’s market leading UPS and power distribution offerings is expected to significantly boost Eaton’s ability to fetch a broader, more robust set of solutions to help customers deal with challenges associated with energy efficiency, thermal management and capital deployment.

Eaton's electrical segment manufactures power distribution and power protection equipment, which cater to the demand for electrical power in commercial buildings, data centers, residences, apartment and office buildings, hospitals and factories. The Electrical segment is divided into Electrical Americas and Electrical Rest of World.

During the second quarter of 2010, revenues at the Electrical Americas segment improved 1% from the year-ago quarter to $894 million, while operating profit slipped 17% to $121 million. Revenues at the Electrical Rest of the World segment rose 12% to $665 million in the quarter. Operating income was $67 million was up significantly from the year-ago level of $26 million.

Eaton’s earnings in the most recent quarter came in at $1.36 per share, beating the Zacks Consensus Estimate of $1.17 and year-ago earnings of 23 cents. Buoyed by strong second quarter results and a stronger market outlook, the company raised its fiscal 2010 earnings outlook to $4.90 - $5.10 per share and provided a third quarter earnings guidance of $1.25 - $1.35 per share. The Zacks Consensus Estimate for third quarter of 2010, fiscal 2010 and 2011 are $1.36, $5.13 and $6.15, respectively.

Cleveland, Ohio-based Eaton Corporation is a global technology leader in electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulics and pneumatic systems for commercial and military use; and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety.

Eaton has approximately 70,000 employees and sells products in more than 150 countries.

We have a Zacks #3 Rank (short-term Hold recommendation) on Eaton shares. We also reiterate our long-term Neutral rating.
 
EATON CORP (ETN): Free Stock Analysis Report
 
Zacks Investment Research