Vertiv Holdings Co. (VRT) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Vertiv Holdings Co. (VRT)? Shares have been on the move with the stock up 12.9% over the past month. The stock hit a new 52-week high of $74.64 in the previous session. Vertiv Holdings Co. has gained 52.8% since the start of the year compared to the 11.6% move for the Zacks Computer and Technology sector and the 11% return for the Zacks Computers - IT Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 21, 2024, Vertiv Holdings Co. reported EPS of $0.56 versus consensus estimate of $0.54.
For the current fiscal year, Vertiv Holdings Co. is expected to post earnings of $2.35 per share on $7.63 billion in revenues. This represents a 32.77% change in EPS on a 11.18% change in revenues. For the next fiscal year, the company is expected to earn $2.91 per share on $8.34 billion in revenues. This represents a year-over-year change of 23.97% and 9.36%, respectively.
Valuation Metrics
Vertiv Holdings Co. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Vertiv Holdings Co. has a Value Score of C. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 31.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 27.5X. On a trailing cash flow basis, the stock currently trades at 29.1X versus its peer group's average of 14.1X. Additionally, the stock has a PEG ratio of 1.22. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Vertiv Holdings Co. currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Vertiv Holdings Co. passes the test. Thus, it seems as though Vertiv Holdings Co. shares could have potential in the weeks and months to come.
How Does VRT Stack Up to the Competition?
Shares of VRT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Dell Technologies Inc. (DELL). DELL has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Dell Technologies Inc. beat our consensus estimate by 27.17%, and for the current fiscal year, DELL is expected to post earnings of $7.32 per share on revenue of $93.7 billion.
Shares of Dell Technologies Inc. have gained 27.9% over the past month, and currently trade at a forward P/E of 15.02X and a P/CF of 9.66X.
The Computers - IT Services industry is in the top 25% of all the industries we have in our universe, so it looks like there are some nice tailwinds for VRT and DELL, even beyond their own solid fundamental situation.
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