Diversified industrial Eaton Corp (ETN) reported first quarter earnings of $1.64 (vs. $1.56 a year ago) after accounting for an $0.06 charge for acquisitions and integration of those acquisitions. Excluding those charges, Eaton earned $1.70 vs. the $1.66 street estimates. Eaton also raised full year guidance by $0.05 to between $7.30 and $7.80.

Eaton is diversified across several important industries with a diversified product line within those industries, making Eaton a good proxy on the economy. Driving earnings are Eaton’s 55% international exposure and extra strong strength in aerospace and ag equiptment. As expected, Eaton’s traditional markets such as autos and trucking remains weak, but the outlook for both autos and trucking is brighter going forward. Depressed auto business due to the recent strike has left pent up demand that should offset any loss caused by the strike. The trucking downturn is expected to bottom in the 2nd quarter and turn up in the 2nd half of the year.

Nonresidential Construction - Concerns too broadbased, opportunities exist

Problems in commercial real estate as expected. However, opportunities exist in Read the rest of this entry »