Vertiv Prepares for First-Quarter 2025 Earnings Announcement
Vertiv VRT is set to report its first-quarter 2025 results on April 23.
Projected Financial Performance
For the upcoming quarter, Vertiv anticipates net sales in the range of $1.9 billion to $1.95 billion, representing an organic growth rate between 17% and 21% year over year. The company expects non-GAAP earnings between 57 cents and 63 cents per share.
The Zacks Consensus Estimate for first-quarter revenues stands at $1.92 billion, reflecting a year-over-year growth of 16.92%. Consensus estimates for earnings are also unchanged at 62 cents per share, indicating a significant year-over-year growth of 44.19%.
Vertiv Holdings Co. Price and Consensus
Vertiv Holdings Co. price-consensus-chart | Vertiv Holdings Co. Quote
Historical Earnings Performance
Vertiv has consistently surpassed the Zacks Consensus Estimate in the last four quarters, achieving an average earnings surprise of 13.67%. (Find the latest EPS estimates and surprises on Zacks earnings Calendar.)
Let’s review the key factors leading up to this announcement.
Key Factors Influencing VRT’s Q1 Results
As a supplier of cooling and power management infrastructure, Vertiv primarily serves data centers and is benefiting from a surge in AI-driven orders. Operators’ heightened emphasis on thermal management aligns well with Vertiv’s competencies, positioning the company to address the rising demand with innovative and efficient solutions.
Additionally, VRT’s recent product launches in March, including Vertiv Unify software and Vertiv SmartRun, enhance its capabilities in infrastructure management and advanced thermal solutions.
The rich partnerships with companies such as Ballard Power Systems, Compass Datacenters, NVIDIA NVDA, Intel, and ZincFive serve as a significant advantage for Vertiv.
Stock Performance Compared to Industry
Year-to-date (YTD), Vertiv shares have fallen 35.6%, outperforming the Zacks Computer & Technology sector’s decline of 17.1% and the Zacks Computer IT Services industry’s drop of 19.6%. Comparative peers, Eaton ETN and Schneider Electric SBGSY, also experienced losses of 19.1% and 5.9%, respectively.
Factors contributing to VRT’s struggles include heightened tariffs from U.S. trade policies, particularly affecting China, alongside sluggish near-term order trends. Vertiv faces stiff competition from Eaton, which has invested over $8 billion into portfolio transformation.
Current Stock Trajectory
Vertiv shares are currently in a bearish trend, trading below their 50-day and 200-day moving averages.
Valuation Concerns
Despite its growth potential, Vertiv carries a Value Score of D, indicating a potentially stretched valuation. The company’s 12-month price/book ratio is 11.45, substantially higher than the sector average of 8.16, Eaton’s 5.67, and Schneider Electric’s 3.97.
Price/Book Ratio Comparison
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Pursuing Growth Amid Challenges
Vertiv is increasing its capacity in various solutions, including liquid cooling and thermal management, in response to AI-driven demand growth. The company operates 23 manufacturing facilities worldwide and has expanded its North American operations with a new 215,000-square-foot facility in Pelzer, SC.
Additionally, Vertiv launched a 7MW reference architecture for NVIDIA’s GB200 NVL72 platform, aimed at enhancing AI data center infrastructure. The collaboration with Ballard Power focuses on developing backup power solutions for data centers, and the integration of ZincFive BC Series UPS battery cabinets has enriched its backup power product line.
Conclusion: A Cautious Approach Recommended
Although Vertiv is seeing rapid expansion within the liquid cooling market, fierce competition poses significant challenges. Concerns surrounding order growth, tariff impacts, and pricey valuations create potential risks for investors. Presently, VRT holds a Zacks Rank #4 (Sell), suggesting it may be prudent for investors to refrain from investing in the stock for now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
