VRT Drops 6.2% In A Day, Wait For A Dip To Buy The Stock

We believe there is not much to fear in VRT stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $54 Bil in market cap, Vertiv provides critical digital infrastructure technologies and lifecycle management services for data centers, communication networks, and industrial environments, including predictive analytics and professional deployment and maintenance.

[1] Valuation Looks Very High

This table highlights how VRT is valued vs broader market. For more details see: VRT Valuation Ratios

[2] Growth Is Very Strong

• Vertiv has seen its top line grow at an average rate of 20.7% over the last 3 years
• Its revenues have grown 26% from $7.2 Bil to $9.1 Bil in the last 12 months
• Also, its quarterly revenues grew 35.1% to $2.6 Bil in the most recent quarter from $2.0 Bil a year ago.

This table highlights how VRT is growing vs broader market. For more details see: VRT Revenue Comparison

[3] Profitability Appears Moderate

• VRT last 12 month operating income was $1.6 Bil representing operating margin of 17.4%
• With cash flow margin of 15.7%, it generated nearly $1.4 Bil in operating cash flow over this period
• For the same period, VRT generated nearly $812 Mil in net income, suggesting net margin of about 8.9%

This table highlights how VRT profitability vs broader market. For more details see: VRT Operating Income Comparison

[4] Financial Stability Looks Very Strong

• VRT Debt was $3.2 Bil at the end of the most recent quarter, while its current Market Cap is $54 Bil. This implies Debt-to-Equity Ratio of 5.8%
• VRT Cash (including cash equivalents) makes up $1.7 Bil of $10 Bil in total Assets. This yields a Cash-to-Assets Ratio of 16.7%

[4] Downturn Resilience Is Moderate

VRT saw an impact slightly worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• VRT stock fell 71.2% from a high of $28.59 on 2 September 2021 to $8.22 on 30 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 2 August 2023
• Since then, the stock increased to a high of $153.49 on 23 January 2025 , and currently trades at $142.61

 
2020 Covid Pandemic

• VRT stock fell 58.6% from a high of $13.46 on 19 February 2020 to $5.57 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 2 June 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read VRT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.