Eaton Corporation plc (ETN): Is This Insider Trading a Scary Sign?

After opening Thursday at around $73.5, Eaton Corporation plc (NYSE:ETN) stock surged to as high as $73.5. It then made a downturn, dipping as low as $71.1736. Although the stock bounced a bit into the close, it finished the day at $73.29, down -1.7 points or -2.27 percent on the day. The final volume for the day was 3.854 million, which was more than its average volume. The firm is left with a market cap of $31.8 billion and now has 433.5 million shares outstanding. Eaton Corporation plc (ETN) stock has lost -0.62 percent of market value in 21 trading days.

ETN stock has a trailing 3-year beta of 1.48, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $4.76 a share in the trailing twelve months. The stock’s value has fallen -7.24 percent year to date (YTD) against a decline of -2.21 percent in 12 month’s time. The company’s shares still trade -18.43 percent away from its 1-year high of $89.85 and 8.26 percent up from 52-week low of $67.70. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Eaton Corporation plc (ETN) will probably climb 19.35 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $101-month high price target. This represents a whopping 37.81 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $87, which represents a return potential of 18.71 percent when compared to the closing price of the stock of $73.29 on Thursday, December 06. The lowest price target for the stock is $75 — slightly more than 2.33 percent from ETN’s current share price.

History has shown that shares in Eaton Corporation plc have gone up on 23 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. Investors will get their next glimpse of ETN’s Q4 earnings on February 05. Analysts are forecasting revenue to climb 4.1 percent to $5.43B in the fiscal fourth quarter, while earnings are seen soaring by nearly 10.85 percent to $1.43 per share. It earned $1.43 per share, in line with the $1.43, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $5.41B, worse than the $5.49B analysts expected. Earnings are estimated to increase by 55.8 percent this year, 9.8 percent next year and continue to increase by 10.65 percent annually for the next 5 years.

Let’s take a look at some insider activity at Eaton Corporation plc (NYSE:ETN) and see the pattern. The earliest insider trade took place on 09/13/2018. Semelsberger Ken D parted with a total of 11.5 thousand shares of company at average share price of $86.57. The total for the sales was set at $995.56 thousand. After this transaction, the insider account balance stood at 83.68 thousand shares. The stock lost -15.34 percent since that insider sale. On 09/06/2018, Mccoy Deborah L, Director, sold 3 thousand shares at a price per share of $84.55. This removed 253.65 thousand shares from the insider’s fortune and the stock saw a -13.32 percent retreat in value since the news became public. This transaction left 32.94 thousand shares in the Director account.

On 09/05/2018, below. Fearon Richard H performed a sale transaction worth $2.08 million. This sale at $83.29 each has eliminated 25 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -12.01 percent decrease since the transaction was reported. The insider now is left with 221.46 thousand shares remaining in the account. Advaithi Revathi, sold 15.5 thousand shares for $1.29 million. The disposal occurred on 08/30/2018 was priced at $82.98 per share. The share price plunged -11.68 percent since the reporting date. Advaithi Revathi now left with a stake of 26.01 thousand ETN stock worth $1.91 million after the insider selling.

The stock is currently hovering around the first support level of $71.81. Below this, the next support is placed in the zone of $70.32. Till the time, the ETN stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 40.05 on daily chart, which may remain a cause for concern. If the price breaks below $70.32 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $74.14 mark may result into a pull-back move towards $74.98 level.

Shares of Eaton Corporation plc (ETN) are trading at a P/E ratio of 17.8 times earnings reported for the past 12 months. The industry ETN operates in has an average P/E of 28.44. Its P/E ratio went as low as 12.28X and as high as 19.5 over the 5-year span.Further, it is sporting a 1.49 on the Price-to-Sales ratio. Compare this with the industry average P/S of 5.25. 32.7 percent is the gross profit margin for Eaton Corporation plc and operating margin sits at 12.2 percent. Along with this, the net profit margin is 10.1 percent.