Vertiv Jumps as Data-Center Orders More Than Double and Guidance Rises

Vertiv shares climbed about 13 to 14 percent in Wednesday trading after the maker of data-center power and cooling systems said third-quarter sales rose 61 percent and organic orders more than doubled from a year earlier. The company also raised its outlook. The jump followed a weak stretch: the stock had closed Tuesday at $208.56, down 16 percent over the prior month.

The quarter beat on every line that mattered

The beat was broad. For the three months that ended September 30, Vertiv reported net sales of $4.31 billion, up from $2.68 billion a year earlier. Diluted earnings came to $1.95 a share on a GAAP basis, a 91 percent increase, while the company’s adjusted figure reached $2.21, ahead of the $1.82 that analysts had expected. Adjusted operating margin widened to 25.2 percent, a gain of 290 basis points, and adjusted free cash flow was $652 million, up 50 percent from a year earlier.

Orders more than doubled

The order book was the headline. Vertiv said organic orders grew more than 100 percent from a year earlier, a sign that demand for the equipment sitting between the power grid and racks of computing hardware keeps accelerating. The company makes the switchgear, busways, and liquid-cooling units that data centers need to run dense clusters of chips, and that gear has become a bottleneck as operators race to add capacity for artificial-intelligence work. An order booked today becomes revenue in later quarters, so a doubling in the book is what convinced the market to look past a soft run in the shares.

The full-year targets moved up

Vertiv raised its outlook across the board. It now expects full-year net sales of $14.45 billion to $14.85 billion, with organic growth of 37 to 39 percent, and adjusted earnings of $7.10 to $7.20 a share. Management set adjusted operating profit at $3.48 billion to $3.56 billion. For the current quarter, the company guided to net sales of $4.41 billion and adjusted earnings of $2.25 a share at the midpoint, a step up from the $4.31 billion in sales it just reported.

The stock was weak going in

The reaction stood out. Vertiv closed Tuesday at $208.56, roughly 38 percent below its summer peak of $335 and down 16 percent over the previous month. Volume that day ran about one and a half times its recent daily average. Wednesday’s gain, if it holds into the close, would claw back a large piece of the autumn decline. The shares still trade well below where they sat in June.

What to watch

The calendar is light until then. Vertiv’s next scheduled report, the fourth quarter, is due in late February, and it will test whether the doubled order rate turns into the revenue the raised guidance now assumes. Before that, the large cloud and data-center operators that buy Vertiv’s equipment report their own capital-spending plans, and those budgets drive its order flow. Today’s close will be the first clean read on how much of the post-earnings jump the market is willing to keep.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.