Vertiv Rallies 31% in a Year: Should You Buy the Stock?

Core Insights - Vertiv (VRT) shares have increased by 31% over the past 12 months, outperforming the Zacks Computer and Technology sector's growth of 22.6% and the Zacks Computers - IT Services industry's decline of 19.4% [1][2] Company Performance - Vertiv has outperformed its closest competitors, Super Micro Computer (SMCI) and Hewlett-Packard Enterprise (HPE), with HPE shares rising by 5.8% and SMCI shares falling by 15.1% in the same period [2] - The stock's outperformance is attributed to a diverse product portfolio, including thermal systems, liquid cooling, UPS, switchgear, busbars, and modular solutions, with organic orders growing approximately 21% and a book-to-bill ratio of 1.4 for Q3 2025 [3] - The backlog increased by 12% sequentially and 30% year-over-year to $9.5 billion, driven by the rapid adoption of AI and the growing need for data centers [4] Strategic Acquisitions - Vertiv's acquisitions have significantly expanded its portfolio, including the $1.0 billion purchase of PurgeRite, enhancing its capabilities in liquid cooling and thermal management [7][8] - The acquisition of Great Lakes improved Vertiv's IT systems offerings, while the acquisition of Weeleay enhanced service capabilities through real-time machine data analysis [9] Market Demand and Growth - The demand for data center infrastructure is being driven by the global acceleration of AI adoption, with Vertiv experiencing a 43% organic sales growth in the Americas and 21% growth in APAC in Q3 2025 [10][11] - Vertiv's partnerships with major companies like NVIDIA and Intel are supporting its growth in global data center markets [12][13] Financial Guidance - For Q4 2025, Vertiv expects revenues between $2.81 billion and $2.89 billion, with organic net sales growth projected at 18% to 22% [14] - For the full year 2025, revenues are anticipated to be between $10.16 billion and $10.24 billion, with organic net sales growth expected at 26% to 28% [15] Earnings Estimates - The Zacks Consensus Estimate for Q4 2025 earnings is $1.28 per share, indicating a year-over-year increase of 29.29%, with revenues expected to grow by 22.09% [16] - The 2025 earnings estimate is pegged at $4.11 per share, reflecting a 44.21% increase from 2024 [17] Valuation - Vertiv is currently trading at a premium, with a trailing 12-month Price/Book ratio of 19.14X compared to the sector's 10.74X, indicating a potential overvaluation [18] Conclusion - Vertiv's strong portfolio and extensive partner base are driving order growth, justifying its premium valuation, and the company holds a Zacks Rank 2 (Buy) with a Growth Score of A, indicating a strong investment opportunity [21]