Should You Buy, Sell or Hold Vertiv Stock Before Q1 Earnings?

Vertiv VRT is set to report its first-quarter 2025 results on April 23.

For the first quarter of 2025, Vertiv expects net sales between $1.9 billion and $1.95 billion, indicating an organic growth rate of 17-21% year over year. Vertiv expects non-GAAP earnings between 57 cents and 63 cents per share.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $1.92 billion, indicating year-over-year growth of 16.92%. The consensus mark for earnings is pegged at 62 cents per share, unchanged over the past 30 days and indicating 44.19% year-over-year growth.
 

Vertiv Holdings Co. Price and Consensus

Vertiv Holdings Co. price-consensus-chart | Vertiv Holdings Co. Quote

Vertiv’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 13.67%, on average. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Let’s see how things are shaping up prior to this announcement.

Factors to Note for VRT’s Q1 Results

Vertiv, 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.

VRT’s expanding portfolio is a positive. In March, VRT launched four new systems — Vertiv Unify software, Vertiv SmartRun, Vertiv CoolLoop RDHx and Vertiv PowerDirect Rack — which expanded capabilities in infrastructure management, prefabricated modular deployment, advanced thermal management and DC power distribution.

VRT’s rich partner base, which includes the likes of Ballard Power Systems, Compass Datacenters, NVIDIA NVDA, Intel and ZincFive, is a key catalyst.

VRT Shares Lag Sector, Industry YTD

Vertiv shares have declined 35.6% year to date (YTD), outperforming the Zacks Computer & Technology sector’s drop of 17.1% and the Zacks Computer IT Services industry’s fall of 19.6%. VRT stock has underperformed its closest peers, including Eaton ETN and Schneider Electric SBGSY. Over the same time frame, Eaton and Schneider Electric fell 19.1% and 5.9%, respectively.

VRT has been suffering from higher tariffs levied by U.S. President Donald Trump on leading trade partners, particularly China, in the technology domain, as well as sluggishness in near-term order trends. Vertiv is facing significant competition from Eaton, which has been investing aggressively. Eaton has invested more than $8 billion in transformative portfolio management. 

VRT Stock’s Performance

Technically, Vertiv shares are displaying a bearish trend as they trade below the 50-day and 200-day moving averages.

VRT Trades Below 50-day & 200-day SMAs

Vertiv stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.

In terms of the 12-month price/book ratio, VRT is trading at 11.45, higher than the sector’s 8.16, Eaton’s 5.67 and Schneider Electric’s 3.97.

Price/Book Ratio

Expanding Capacity, Rich Partner Base Help VRT’s Prospects

Vertiv 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’s launch of a 7MW reference architecture for the NVIDIA GB200 NVL72 platform, co-developed with NVIDIA, to support AI infrastructure, is noteworthy. The solution accelerates the deployment of NVIDIA’s AI data center platform with up to 132kW per rack and optimizes the power, cooling, performance and scalability of AI-driven data centers.

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.

Conclusion

Although 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 this domain. Concerns over near-term order growth, tariff headwinds and stretched valuation are headwinds that make VRT stock a risky bet.

VRT currently has a Zacks Rank #4 (Sell), suggesting that it may be wise for investors to stay away from the stock for the time being. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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