Dean Mouhtaropoulos/Getty Images News Introduction A SPAC (special purpose acquisition company) was touted as a quick road for companies to IPO and that were vetted by institutional investors. Unfortunately, the company founders and anchor investors had the incentive to "exaggerate" projections driving shares to unreasonable valuations and then selling out. The majority of SPACs have nearly disappeared, trading, with luck, down 90% from placement. Some have succeeded and Vertiv Holdings Co (NYSE:VRT) is one ...

1 IF D H HT T 100 - 100 1 i T 1 Pgiam/iStock via Getty Images Seeking Alpha Investment thesis My initial bullish thesis about Vertiv (NYSE:VRT) did not age well. The stock dropped by about 16% since mid-May. Over the same period, the S&P 500 rallied by almost 8%. My analysis suggests that fundamentals are still strong. Therefore, the decline is likely more about market sentiment and the stock's inherent volatility. I think so because the company demonstrates strong performance and the AI momentum for the bu ...

Shares of Vertiv Holdings Co. (VRT) have gained 0.4% over the past four weeks to close the last trading session at $76.78, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $102.30 indicates a potential upside of 33.2%. The mean estimate comprises 10 short-term price targets with a standard deviation of $7.33. While the lowest estimate of $92 indicates a 19.8% increase from the cu ...

Vertiv (VRT) shares have surged 62.4% year to date (YTD), outperforming the broader Zacks Computer & Technology sector's return of 22.1% and the Zacks IT Services industry's gain of 2.4%. Vertiv offers cooling and power management infrastructure technologies primarily addressing data center providers. It is riding on strong AI-driven order growth. The growing focus on thermal management by data center providers bodes well for Vertiv. This has helped VRT outperform its industry peers over the same timeframe, ...

Core Viewpoint - The article discusses the lack of positions held by Parkev Tatevosian, CFA, and The Motley Fool in the mentioned stocks, emphasizing their disclosure policy and potential compensation for promoting services [1] Group 1 - Parkev Tatevosian has no position in any of the stocks mentioned [1] - The Motley Fool also has no position in any of the stocks mentioned [1] - The disclosure policy of The Motley Fool is highlighted, indicating transparency in their operations [1]

AI Adjacent Companies and Market Reaction - Vertiv Holdings, Constellation Energy, and NuScale Power surged in Wednesday's trading, with shares up 9 9%, 11 6%, and 6 5% respectively [1] - These companies are considered "AI adjacent" due to their potential to benefit from the increasing power and electricity demands of AI data centers [2] - The recent sell-off in AI-related stocks led to significant pullbacks, with Constellation down 27%, Vertiv down 29%, and NuScale down 44% from their all-time highs [8] Earnings and Commentary Impact - Microsoft and AMD's strong earnings reports and positive AI outlooks alleviated fears of slowing AI growth, boosting AI-adjacent stocks [3][9] - Microsoft CEO Satya Nadella highlighted strong demand for AI-powered products, with CoPilot seats doubling quarter over quarter and continued investment in Azure AI training [10] - AMD exceeded expectations with 115% year-over-year data center growth and raised its 2024 MI300 AI chip sales guidance to $4 5 billion from $4 billion [11] Company-Specific Developments - Vertiv reported strong Q2 results and raised full-year guidance, despite forecasting a sequential decline in Q3 orders, citing strong demand pipeline [5] - Constellation Energy and NuScale Power, both nuclear power-focused companies, saw significant year-to-date gains of 45% and 190% respectively, despite recent sell-offs [6] - NuScale faced a short-seller attack questioning its technology and SEC investigation claims, but the company denied the allegations and stated regulatory inquiries were routine [7] Market Outlook - The recent pullback in AI-related stocks is viewed as a healthy correction rather than the start of a tech crash, with long-term growth prospects remaining intact [12] - The earnings season reinforced the AI growth narrative, suggesting potential entry points for investors with a long-term perspective [12]

sitox/E+ via Getty Images We previously covered Vertiv Holdings (NYSE:VRT) in June 2024, discussing its well-diversified offerings across power management/ storage, thermal management through chilled-water/ liquid cooling solutions, integrated server rack systems, and operating stacks, one that is particularly critical during the ongoing cloud transition and generative AI boom. Combined with its highly strategic partnership with Nvidia (NVDA) and Intel (INTC) for the next-gen AI data center platforms, we ha ...

Core Viewpoint - Vertiv (VRT) is positioned as a strong buy due to its role in the growing data center industry, driven by the demand from AI programs [1] Company Overview - Vertiv Holdings Co provides digital infrastructure and continuity solutions, including hardware, software, analytics, and ongoing services, and is headquartered in Columbus, Ohio [2] Earnings Performance - The company has a solid earnings history, consistently beating the Zacks Consensus in the last four quarters [11] - The average positive earnings surprise over the last four quarters is 12.9% [4] - Recent earnings estimates for the current quarter have increased from 65 cents to 70 cents [6] - The full year 2024 earnings estimate has risen from $2.42 to $2.58 [7] - Next year's earnings estimate has moved up from $3.13 to $3.31 [13] - The company reported $1.953 billion in revenue, beating sales estimates by $9 million, representing a year-over-year growth of 12.6% and a quarter-over-quarter growth of 19.14% [14] Growth Projections - For 2024, the company is expected to show growth of 11.86%, accelerating to 12.97% in 2025 [8] Valuation Metrics - The forward PE ratio is 29x, aligning with expectations for a growth stock, while the price-to-book ratio is 20x, which is considered high [9] - The price-to-sales ratio is at 4x, deemed reasonable given the company's growth [9] Recent Guidance - Despite a recent earnings report that led to a nearly 16% stock drop due to lower growth expectations in one segment (10-15% growth instead of 60%), the company is still expected to show revenue growth this year and acceleration next year [10] - Operating margins have improved from 9.97% to 10.91%, and are projected to reach 11.75% over the last three quarters, indicating that growing sales and higher margins will lead to increased earnings per share [17]

Financial Performance - Net sales for Q2 2024 were $1,952.8 million, a 12.6% increase from $1,734.1 million in Q2 2023[214] - Net income for Q2 2024 was $178.1 million, a 114.1% increase from $83.2 million in Q2 2023[214] - Comprehensive income for Q2 2024 was $151.8 million, a 64.5% increase from $92.3 million in Q2 2023[215] - Operating profit for Q2 2024 was $336.0 million, a 63.3% increase from $205.8 million in Q2 2023[214] - The company's diluted earnings per share for Q2 2024 were $0.46, a 109.1% increase from $0.22 in Q2 2023[214] - Net income for the six months ended June 30, 2024 was $172.2 million, compared to $133.5 million for the same period in 2023[217] - Operating profit for the Americas segment increased to $285.1 million for the three months ended June 30, 2024, from $191.7 million for the same period in 2023[243] - Total reportable segments' operating profit increased to $426.9 million for the three months ended June 30, 2024, from $309.8 million for the same period in 2023[243] - Net sales for the three months ended June 30, 2024, were $1,121.1 million, a 16.9% increase compared to $959.4 million in the same period in 2023[251] - Operating profit for the three months ended June 30, 2024, was $285.1 million, a 48.7% increase compared to $191.7 million in the same period in 2023[251] - Operating margin increased to 25.4% in Q2 2024, up from 20.0% in Q2 2023, driven by fixed cost leverage, procurement productivity improvements, and price realization[251][252] - Operating profit for the first six months of 2024 was $62.7 million, a $7.9 million increase compared to the same period in 2023, driven by higher sales volumes, improved price realization, and fixed cost leverage[255] Costs and Expenses - Vertiv's cost of sales for Q2 2024 was $1,211.6 million, a 6.3% increase from $1,140.1 million in Q2 2023[214] - The company's selling, general and administrative expenses for Q2 2024 were $363.8 million, an 11.1% increase from $327.6 million in Q2 2023[214] - SG&A expenses for the first six months of 2024 were $677.8 million, an increase of $41.5 million compared to the same period in 2023, primarily due to higher compensation costs, IT and R&D expenses, and professional service fees[253] - Income tax expense for the first six months of 2024 was $79.5 million, a $12.4 million increase compared to $67.1 million in the same period in 2023, driven by improved business results and changes in warrant liabilities[254] Cash Flow and Capital Expenditures - Net cash provided by operating activities was $515.9 million for the six months ended June 30, 2024, up from $295.6 million for the same period in 2023[217] - Capital expenditures were $69.9 million for the six months ended June 30, 2024, compared to $53.6 million for the same period in 2023[217] - Capital expenditures for the first six months of 2024 were $81.5 million, with full-year 2024 expectations set between $175 million and $200 million[256] Share Repurchases and Stock Performance - Vertiv repurchased 9,076,444 shares of its common stock in Q1 2024, with $2.4 billion remaining for additional share repurchases as of June 30, 2024[96] - Vertiv's Board of Directors approved a stock repurchase program of up to $3.0 billion through December 31, 2027[95] - The company repurchased $599.9 million worth of common stock during the six months ended June 30, 2024[217] - The company's stock price increased to $86.57 as of June 30, 2024, from $48.03 as of December 31, 2023[237] - The Vertiv Stockholder sold 20,000,000 shares of Class A common stock on August 8, 2023, reducing its ownership to less than 5% of the outstanding shares[261] Assets and Liabilities - Total current assets increased to $4,191.4 million as of June 30, 2024, up from $4,001.5 million at the end of 2023[216] - Accounts receivable increased to $2,218.8 million as of June 30, 2024, compared to $2,118.1 million at the end of 2023[216] - Inventories rose to $1,103.7 million as of June 30, 2024, up from $884.3 million at the end of 2023[216] - Total liabilities increased to $6,570.8 million as of June 30, 2024, compared to $5,983.6 million at the end of 2023[216] - Total cash, cash equivalents, and restricted cash decreased to $587.7 million as of June 30, 2024, from $788.6 million as of December 31, 2023[229] - Total inventories increased to $1,103.7 million as of June 30, 2024, from $884.3 million as of December 31, 2023[229] - Property, plant and equipment, net increased to $571.1 million as of June 30, 2024, from $560.1 million as of December 31, 2023[229] - The company's long-term debt fair value was $2,118.1 million as of June 30, 2024, compared to $2,107.5 million as of December 31, 2023[238] - Accumulated other comprehensive income (loss) was $(9.8) million as of June 30, 2024, compared to $(65.1) million for the six months ended June 30, 2024[239] Tax and Legal Matters - The company recorded a $10.1 million payment to the Mexican tax administration service (SAT) in Q1 2024, which it intends to seek reimbursement for[192] Revenue by Region - Total revenue for the six months ended June 30, 2024 was $3,255.2 million, with $1,821.7 million from the Americas, $708.8 million from Asia Pacific, and $724.7 million from Europe, Middle East & Africa[222] Hedging and Derivatives - The company has derivative instruments hedging foreign currency exchange rates with a notional amount of $81.0 million, resulting in a realized gain of $0.6 million for the three and six months ended June 30, 2024[234] - The company recognized mark-to-market losses of $0.3 million and $1.0 million for the three and six months ended June 30, 2024, respectively, related to economic hedges for aluminum and copper purchases[235] Credit Facility - The ABL Revolving Credit Facility was amended to increase the revolving loan commitments by $30.0 million, bringing the total loan commitment to $600.0 million[258]

Vertiv Holdings Co (NYSE:VRT) Q2 2024 Earnings Conference Call July 24, 2024 11:00 AM ET Corporate Participants Lynne Maxeiner - Vice President of Investor Relations Dave Cote - Executive Chairman Gio Albertazzi - Chief Executive Officer David Fallon - Chief Financial Officer Conference Call Participants Amit Daryanani - Evercore ISI Steve Tusa - JPMorgan Nicole DeBlase - Deutsche Bank Mark Delaney - Goldman Sachs Andy Kaplowitz - Citigroup Scott Davis - Melius Research Michael Elias - TD Cowen Jeff Sprague ...