Buy, Sell or Hold Vertiv Stock? Key Tips Ahead of Q4 Earnings

Vertiv VRT is set to report its fourth-quarter 2024 results on Feb. 12.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.For the fourth quarter of 2024, Vertiv expects revenues between $2.115 billion and $2.165 billion, indicating an organic growth rate of 11-15% year over year. Vertiv expects fourth-quarter 2024 non-GAAP earnings between 80 cents and 84 cents per share. Vertiv Holdings Co. Price and EPS Surprise Vertiv Holdings Co. price-eps-surprise | Vertiv Holdings Co. Quote The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $2.15 billion, indicating year-over-year growth of 15.37%. The consensus mark for earnings is pegged at 84 cents per share, unchanged over the past 30 days and indicating 50% year-over-year growth.Vertiv’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 10.13%, on average.Let’s see how things are shaping up prior to this announcement.Factors to Note for VRT’s Q4 ResultsVertiv, a cooling and power management infrastructure provider, predominantly serves data center providers and has been capitalizing on robust AI-driven order growth. The growing focus on thermal management by data center operators aligns well with Vertiv’s strengths, and the company is poised to meet the increasing demand with advanced, efficient solutions.Vertiv’s fourth-quarter 2024 results are expected to have benefited from growing demand for its cooling and power management infrastructure solution. It has been riding on strong AI-driven order growth. The growing focus on thermal management by data center providers bodes well for VRT.Vertiv hit a backlog of $7.4 billion at the end of the third quarter of 2024. Organic orders surged 19.2% year over year, and the book-to-bill ratio was 1.1 times.VRT Shares Outperform Sector, IndustryVertiv shares have gained 98% in the trailing 12 months, outperforming the Zacks Computer & Technology sector’s appreciation of 20.7% and the Zacks Computer IT Services industry’s return of 7.8%.VRT Stock’s Performance Image Source: Zacks Investment Research However, Vertiv stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.In terms of the forward 12-month Price/Earnings (P/E) ratio, VRT is trading at 32.94X, higher than its median of 32.81X and the sector’s 26.52X.Price/Earnings (P/E) Ratio Image Source: Zacks Investment Research Vertiv Expanding Capacity to Support Clientele GrowthVertiv is expanding capacity across liquid cooling, thermal, UPS, switchgear, busbar and modular solutions to accommodate AI-driven demand growth. It currently has 23 manufacturing plants globally.Vertiv has expanded its North American manufacturing operations with a 215,000 square feet (about 20,000 square meters) facility in Pelzer, SC, which supports production of integrated modular solutions, modular power systems, and other integrated systems using Vertiv’s portfolio of power cooling and IT infrastructure technologies for data centers.Vertiv has expanded its liquid cooling portfolio with the CoolPhase CDU liquid-to-refrigerant coolant distribution unit and the CoolChip Fluid Network in-rack manifold.These solutions expand VRT’s infrastructure offerings for data centers. These modular, cost-effective systems can be easily deployed in data centers that were not originally configured for liquid cooling. Hence, data centers can support high-density computing for AI alongside traditional air-cooled racks.Vertiv’s launch of a 7MW reference architecture for the NVIDIA GB200 NVL72 platform, co-developed with NVIDIA NVDA, to support AI infrastructure is noteworthy. The solutions accelerate the deployment of NVIDIA’s AI data center platform with up to 132kW per rack and optimize the power, cooling, performance and scalability of AI-driven data centers.Vertiv’s Rich Partner Base is PositiveVRT has a growing network of rich partnerships with companies such as Ballard Power Systems BLDP, Compass Datacenters, NVIDIA, Intel and ZincFive.Ballard Power and Vertiv are collaborating on developing backup power applications for data centers and critical infrastructures, scalable from 200kW to multiple MWs. The company has integrated Ballard fuel cell power modules with Vertiv Liebert EXL S1 uninterruptible power system (UPS) within a successfully demonstrated proof of concept at Vertiv’s facility in Ohio.Vertiv has added the ZincFive BC Series UPS battery cabinets to its portfolio of battery systems that are available for data center backup power.VRT Suffers From Stiff Competition, Stretched ValuationAlthough VRT is experiencing rapid growth in the liquid cooling market, a critical area for AI and high-density computing, it is also facing fierce competition in the sector.Given the company’s modest growth prospects, we believe that its valuation is significantly stretched, making the stock a risky bet for investors.VRT currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point in the stock. 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