Secular Tailwinds Drive Growth in Orders and Backlog During Eaton’s Q2; We Maintain Our FVE

We see no reason to change our $154 fair value estimate for narrow-moat-rated Eaton following the firm's second-quarter results. There were puts and takes in the report as both Eaton’s top and bottom lines trailed below our prior expectations, even as we nearly pegged segment operating margins of 20.1% during the quarter (we were off by 10 basis points to the upside). That said, management raised its full-year adjusted EPS guide by 4 cents to $7.56 at the midpoint. For the future, we model at the midpoint of adjusted EPS guidance, which represents a slight 2 cent decrease from our prior expectations.