Insights

Why Vertiv Stock Rallied as Much as 12% at the Open Today

What happened
Shares of Vertiv (NYSE: VRT), which makes equipment for data centers, rose sharply at the start of trading on Wednesday, gaining as much as 12% in the first few minutes of the day. The big news was the company’s earnings release, which hit the market prior to the opening bell. Here’s a quick look at the key numbers.
So what
First-quarter 2022 sales were $1.156 billion, a 5.3% increase compared to the same quarter of 2021. Organic growth was roughly 0.4%, a figure that excludes the impact of things like acquisitions and currency fluctuations. Sales were driven by strength in most regions outside of China, where coronavirus lockdowns continue to impact demand.
That said, first-quarter orders grew 34% year over year, and the company’s backlog is now at a record $4.1 billion, which bodes well for the future. Top-line results were roughly in line with Wall Street’s expectations.

Image source: Getty Images.

On the bottom line, however, Vertiv easily beat the analyst consensus. Although the company posted an adjusted loss of $0.08 per share, Wall Street was expecting a loss of $0.16 per share. Investors generally like it when a company beats like that. Still, the company posted an adjusted profit of $0.21 per share in the first quarter a year ago, so the news isn’t all positive here.
A big piece of the problem year over year on the earnings front stems from inflationary pressures. Still, the company was able to raise prices without hurting its sales, noting the record backlog, so this could end up being more of a short-term adjustment than a long-term headwind.
Now what
In addition to the quarterly beat, Vertiv also updated its full-year 2022 guidance, increasing the low end of its sales expectations and slightly upping its earnings targets. The inflationary environment led to a slight lowering of its operating-margin expectations, but that’s not surprising. All in, given the backdrop, it was a decent report, and the outlook here is reasonably strong. Investors were probably right to be upbeat this morning.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

Shares of Vertiv (NYSE: VRT), which makes equipment for data centers, rose sharply at the start of trading on Wednesday, gaining as much as 12% in the first few minutes of the day. The big news was the company’s earnings release, which hit the market prior to the opening bell. Here’s a quick look at the key numbers.

So what

First-quarter 2022 sales were $1.156 billion, a 5.3% increase compared to the same quarter of 2021. Organic growth was roughly 0.4%, a figure that excludes the impact of things like acquisitions and currency fluctuations. Sales were driven by strength in most regions outside of China, where coronavirus lockdowns continue to impact demand.

That said, first-quarter orders grew 34% year over year, and the company’s backlog is now at a record $4.1 billion, which bodes well for the future. Top-line results were roughly in line with Wall Street’s expectations.

Image source: Getty Images.

On the bottom line, however, Vertiv easily beat the analyst consensus. Although the company posted an adjusted loss of $0.08 per share, Wall Street was expecting a loss of $0.16 per share. Investors generally like it when a company beats like that. Still, the company posted an adjusted profit of $0.21 per share in the first quarter a year ago, so the news isn’t all positive here.

A big piece of the problem year over year on the earnings front stems from inflationary pressures. Still, the company was able to raise prices without hurting its sales, noting the record backlog, so this could end up being more of a short-term adjustment than a long-term headwind.

Now what

In addition to the quarterly beat, Vertiv also updated its full-year 2022 guidance, increasing the low end of its sales expectations and slightly upping its earnings targets. The inflationary environment led to a slight lowering of its operating-margin expectations, but that’s not surprising. All in, given the backdrop, it was a decent report, and the outlook here is reasonably strong. Investors were probably right to be upbeat this morning.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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