Review the Analyst Coverage/Opinion of EATON. The recommendation trends average
ID: 2779945 • Letter: R
Question
Review the Analyst Coverage/Opinion of EATON. The recommendation trends average this and last weeks' opinions of professional analysts about the stock on a scale that ranges from 1.0 (Strong Buy) to 5.0 (Sell). Sell means the analysts don't like the stock's prospects and advise investors to sell if they own the stock and otherwise to not invest in it. A strong buy means just the opposite: buy the stock because analysts expect it to make money for investors. Review the earnings and revenues estimates for the firm's future earnings, revenues, and growth.
Write TWO PARAGRAPHS explaining what the professional analysts are saying about investing in the stock and estimates of the firm's future earnings, revenues, and growth. Is there a clear recommendation?
Recommendation Trends> 24 20 Strong Buy 15 Buy Hold 10 15 Underperform Sell Nov Oct Sep Aug Recommendation Rating> 2.7 Hold Under Sell perform Strong Buy BuyExplanation / Answer
The stock has a recommendation rating of 2.7 and this rating is in close proximity to the ‘hold’ opinion of the analysts. This recommendation means neither buy nor sell. This means that analysts expect Eaton to perform with the market or at the same pace as comparable companies. Its performance is not expected to beat the market nor is it expected to be subpar when compared to market performance. We can also see that (from the recommendation trend graph) that the number of analysts recommending hold on Eaton was 14 in the month of August. This remained same for September and October. However, in the month of November the number of analysts recommending a hold increased to 15. At the same time the number of analysts recommending a strong buy reduced from 4 to 3. This indicates that the outlook of the analysts for Eaton stock became subdued in the month of November. This may be attributed to several reasons – poor set of financial numbers reported by the company in its latest quarter, change in outlook due to internal as well as external changes etc.
From the revenue estimate table provided we can see that average estimate of sales for 2017 is $20.17 billion and for 2018 is $20.86 billion. Average estimates of EPS (earnings per share) are $4.59 for 2017 and $5.11 for 2018. These estimates seem to be in line with the market expectations and this is the reason for the predominant ‘hold’ recommendation.
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