Vertiv Stock Price Decreases 24% YTD: Should You Buy the Dip?

Core Viewpoint - Vertiv (VRT) shares have declined 24% year to date, underperforming the broader Zacks Computer and Technology sector and the Zacks Computers - IT Services industry, both of which have seen a 6% decline [1][2]. Company Performance - VRT shares are currently considered overvalued with a Value Score of C, trading at a 12-month price/book ratio of 13.51, which is higher than its median of 11.22 and the sector's 9.83 [5]. - Technically, Vertiv shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend [8]. Growth Prospects - Vertiv's extensive product portfolio, including thermal systems, liquid cooling, UPS, switchgear, busbar, and modular solutions, is enhancing its growth prospects. The backlog at the end of 2024 was $7.18 billion, reflecting a 30% increase over 2023 [12]. - The company has seen organic orders grow approximately 30% in the trailing 12 months, with a book-to-bill ratio of 1.2 times for 2024 [12]. - Strong capital expenditure plans by hyperscalers for data center capacity expansion are favorable for Vertiv, supported by a rich partner base including companies like NVIDIA and Intel [14]. Acquisitions and Innovations - Vertiv has been proactive in acquisitions, recently acquiring centrifugal chiller technologies from BiXin Energy Technology, which enhances its solutions for high-performance computing and AI [15]. Financial Outlook - For 2025, Vertiv expects organic sales growth between 15% and 17%, with net sales projected to be between$ 9.13 billion and $9.28 billion, indicating a year-over-year growth of 15.07% [16][17]. - Adjusted operating profit for 2025 is expected to be between$ 1.91 billion and $1.96 billion, with an adjusted operating margin anticipated to be 20.8-21.2% [17]. - Adjusted earnings for 2025 are expected to be between$ 3.50 and $3.60 per share, with a consensus estimate of$ 3.59 per share, indicating a year-over-year growth of 25.96% [18]. Quarterly Estimates - For Q1 2025, adjusted earnings are expected to be between 57 cents and 63 cents per share, with a consensus estimate of 62 cents per share, reflecting a year-over-year growth of 44.2% [19]. - Net sales for Q1 2025 are projected to be between $1.9 billion and$ 1.95 billion, indicating a year-over-year growth of 16.9% [19]. Conclusion - Vertiv is benefiting from a strong portfolio and a rich partner base, driving order growth. The solid top-line growth potential justifies a premium valuation, with a Zacks Rank 2 (Buy) and a Growth Score of A, indicating a strong investment opportunity [21].