Can VRT's Q3 Earnings Beat & Raised 2024 View Push the Stock Higher?

Vertiv Holdings VRT reported third-quarter 2024 non-GAAP earnings of 76 cents per share, beating the Zacks Consensus Estimate by 7.04%. The figure jumped 46.2% year over year.VRT’s earnings beat the Zacks Consensus Estimate in the trailing four quarter, which is commendable.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Net sales increased 19% year over year to $2.07 billion, surpassing the Zacks Consensus Estimate by 4.64%. Net sales on an organic basis increased 19.2% year over year.Vertiv Holdings Co. Price and Consensus  Vertiv Holdings Co. price-consensus-chart | Vertiv Holdings Co. QuoteVRT Prospects Ride on Strong BacklogVRT shares have outperformed the Zacks Computer & Technology sector year to date (YTD). While Vertiv shares have appreciated 125.6%, the broader sector has returned 25.3% in the said period.Organic orders (excluding foreign exchange) rose 19.2% year over year, and the book-to-bill ratio was 1.1X in the third quarter. The backlog at the end of the third quarter was $7.4 billion.These factors have helped VRT outperform its Zacks Computers – IT Services industry and peers, including CoStar Group CSGP, CyberArk Software CYBR and Accenture ACN.Over the same timeframe, CyberArk and Accenture shares have returned 32.1% and 5.2%, respectively, while CoStar Group shares have fallen 16.9%. The industry has appreciated 9.7% YTD.VRT’s Top-Line DetailsProduct revenues (which accounted for 77.9% of total revenues) increased 19.7% year over year to $1.62 billion. Service revenues (22.1% of total revenues) increased 16% year over year to $457.9 million.Americas revenues increased 19.5% year over year (20.5% organic) to $1.198 billion and accounted for 57.8% of total revenues. Product revenues increased 20.1% year over year (21.5% organic) to $957 million. Service & spares revenues increased 17.2% (16.8% organic) to $241.6 million in the reported quarter.Asia and Pacific (APAC) revenues increased 11.3% year over year (10.4% organic) to $432.4 million and accounted for 20.9% of total revenues. Product revenues increased 9.9% year over year (9% organic) to $313.9 million. Service & spares revenues increased 14.9% (15% organic) to $118.5 million in the reported quarter.Europe, Middle East, and Africa (EMEA) revenues increased 26.1% year over year (25.2% organic) to $442.5 million and accounted for 21.3% of total revenues. Product revenues increased 29.2% year over year (27.1% organic) to $344.7 million. Service & spares revenues increased 16.4% (19.3% organic) to $97.8 million in the third quarter of 2024.VRT’s Operating DetailsSelling, general and administrative (SG&A) expenses increased 2.3% year over year to $334.6 million. As a percentage of sales, SG&A expenses decreased 260 basis points (bps) year over year to 16.1%.Adjusted operating profit jumped 40.7% year over year to $416.9 million. The third-quarter non-GAAP operating margin was 20.1%, up 310 bps year over year.Americas’ adjusted operating profit surged 46.9% year over year to $303.4 million. EMEA’s adjusted operating profit soared 49.2% to $114.4 million.However, APAC’s adjusted operating profit declined 11.3% year over year to $44.1 million.VRT’s Balance Sheet Remains StrongAs of Sept. 30, 2024, cash, cash equivalents and marketable securities totaled $908.7 million, compared with $579.7 million as of June 30, 2024.Long-term debt at the end of the third quarter was $2.93 billion, down from $2.94 billion reported in the previous quarter.Cash flow from operating activities was $375.1 million for the reported quarter, down from $378.4 million in the prior quarter. Free cash flow was $335.9 million for the third quarter.VRT Raises 2024 GuidanceFor 2024, revenues are expected between $7.78 billion and $7.83 billion. Organic net sales growth is expected between 13% and 15%.The Zacks Consensus Estimate for revenues is pegged at $7.69 billion, indicating 12.12% growth over 2023.Vertiv expects adjusted operating profit between $1.4875 billion and $1.495 billion. Operating margin is expected to be 18.9-19.1%.VRT expects 2024 non-GAAP earnings between $2.66 per share and $2.70 per share. The Zacks Consensus Estimate for non-GAAP earnings is pegged at $2.58 per share, suggesting year-over-year growth of 45.76%.The free cash flow for 2024 is expected between $975 million and $1.0325 billion.For fourth-quarter 2024, revenues are expected between $2.115 billion and $2.165 billion. Organic net sales are expected to increase 11-15%.The Zacks Consensus Estimate for revenues is pegged at $1.98 billion, indicating 13.71% year-over-year growth.Vertiv expects adjusted operating profit between $427 million and $447 million. Operating margin is expected to be 20.2-20.6%.VRT expects fourth-quarter 2024 non-GAAP earnings between 80 cents and 84 cents per share. The Zacks Consensus Estimate for non-GAAP earnings is pegged at 71 cents per share, suggesting year-over-year growth of 36.54%.ConclusionVertiv raised its 2024 guidance with strong orders, a record high backlog and solid operational execution support. This is expected to keep the momentum alive in VRT shares.Currently, Vertiv carries a Zacks Rank #2 (Buy), which implies that investors should accumulate the stock post-third-quarter earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Accenture PLC (ACN): Free Stock Analysis Report CoStar Group, Inc. (CSGP): Free Stock Analysis Report CyberArk Software Ltd. (CYBR): Free Stock Analysis Report Vertiv Holdings Co. 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