Upgrading Vertiv Holdings Co: A Strong EPS Growth and Undervalued Opportunity
Vertiv Holdings Co (VRT), a leading global provider of critical infrastructure solutions for various industries, has recently experienced underperformance in the stock market. However, a closer look at the company’s financial performance reveals a compelling investment opportunity. In Q4 2021, Vertiv reported non-GAAP EPS of $0.99, surpassing analysts’ expectations of $0.88. This strong earnings beat was driven by a 26% year-over-year (YoY) revenue growth, which totaled $1.4 billion.
Robust Financial Performance
Vertiv’s impressive financial results were not a one-time occurrence. The company’s financial momentum has been consistent throughout 2021. For the full year, Vertiv reported a 21% YoY revenue growth and a 19% YoY increase in adjusted EBITDA. These figures demonstrate the company’s ability to generate strong revenue growth and profitability, despite the challenges posed by the global economic environment.
Strong Backlog and Free Cash Flow
Vertiv’s financial strength is further supported by a robust backlog of $7.2 billion, which represents a 25% YoY increase. This substantial backlog indicates that the company has a healthy pipeline of orders, which should translate into continued revenue growth in the coming quarters. Additionally, Vertiv generated $546 million in free cash flow in 2021, up from $327 million in 2020. This free cash flow growth is a testament to the company’s operational efficiency and financial discipline.
Key Risks
Despite Vertiv’s strong financial performance, there are certain risks that investors should be aware of. One such risk is the potential for order growth lag in the Europe, Middle East, and Africa (EMEA) region. Vertiv’s revenue growth in EMEA was lower than its overall revenue growth rate in 2021, which may be a cause for concern. Another risk is the possibility of a data center spending slowdown, which could impact Vertiv’s demand for its critical infrastructure solutions.
Impact on Individuals and the World
For individuals looking to invest, Vertiv’s strong EPS growth and undervalued stock price present an attractive opportunity. The company’s consistent financial performance and robust backlog suggest that it is well-positioned to continue generating strong revenue and earnings in the coming quarters. Furthermore, Vertiv’s critical infrastructure solutions are essential for various industries, making it a resilient investment in uncertain economic conditions.
At a broader level, Vertiv’s financial performance and growth prospects have implications for the technology sector and the global economy. The technology sector, particularly the data center market, has been a key driver of economic growth in recent years. Vertiv’s strong financial performance is a positive sign for the sector, indicating that it continues to be a major contributor to economic growth.
Conclusion
In conclusion, despite Vertiv’s recent underperformance in the stock market, its strong EPS growth, robust backlog, and free cash flow upgrades make it an attractive investment opportunity. While there are certain risks, such as potential order growth lag in EMEA and a data center spending slowdown, these risks are outweighed by the company’s financial strength and growth prospects. For individuals and the technology sector, Vertiv’s financial performance is a positive sign, indicating continued growth and innovation in the critical infrastructure solutions market.
- Vertiv reported Q4 2021 non-GAAP EPS of $0.99, beating analysts’ expectations.
- Revenue grew 26% YoY in Q4 2021, totaling $1.4 billion.
- Full-year 2021 revenue grew 21% YoY, and adjusted EBITDA grew 19% YoY.
- Vertiv’s backlog stood at $7.2 billion, up 25% YoY.
- Free cash flow grew to $546 million in 2021, up from $327 million in 2020.
- Potential risks include order growth lag in EMEA and a data center spending slowdown.
- Vertiv’s financial performance is a positive sign for the technology sector and the global economy.
