Eaton to Buy Tuthill Unit - Analyst Blog

Electric equipment maker Eaton Corporation (ETN) said it will acquire Tuthill Coupling Group with a view to strengthen its fluid conveyance business.

Eaton expects the Tuthill acquisition to provide its customers with a more complete fluid conveyance coupling product portfolio. The company believes the acquisition is a best fit to its hydraulics business and strengthens Eaton's regional presence to better serve key market segments.

The Tuthill Coupling Group, a unit of Tuthill Corporation, produces pneumatic and hydraulic quick coupling solutions and leak free connectors used in industrial, construction, mining, defense, energy and power applications. Tuthill Coupling has nearly 220 employees in Berea, Ohio and Annemasse, France. Net revenue earned at the company's division was roughly $35 million for the 12 months ended November 30, 2010.

Eaton has been active on the acquisition front in recent months. The Tuthill deal marks the fourth acquisition deal for Eaton in the second half of 2010. Earlier, the company successfully completed three acquisitions in a span of three months – CopperLogic Inc. in October, Wright Line Holding Inc. in August and EMC Engineers Inc. in July.

Eaton Corporation reported third-quarter 2010 adjusted earnings of $1.60 per share, exceeding the year-ago earnings of $1.21 per share. For the fourth quarter, Eaton has guided net and adjusted earnings in the range of $1.50–$1.60 and $1.55–$1.65, respectively. The company expects net and adjusted earnings for 2010 to range from $5.30–$ $5.40 and $5.45–$5.55, respectively.

The Zacks Consensus Estimates for fourth quarter 2010, fiscal year 2010 and fiscal year 2011 are $1.65 per share, $5.56 per share and $6.99 per share, respectively.

Eaton Corporation currently retains a Zacks #1 Rank (short-term Strong Buy rating). The company fares better than its peers - ITT Corporation (ITT) and Johnson Controls Inc. (JCI) - which carry a short term Zacks #3 Rank (Hold). We maintain our long-term Outperform rating on the stock, given the transformation of the company into a diversified industrial enterprise, with leading positions in its core electrical, hydraulic and aerospace market segments, from an automotive and truck component manufacturer.

Based in Cleveland, Ohio, Eaton Corporation deals 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.

 
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