Vertiv VRT shares have plunged 24% year to date, underperforming the broader Zacks Computer and Technology sector’s 6% decline and the Zacks Computers - IT Services industry’s fall of 6.2%.

Artificial Intelligence (AI)-related stocks, including Vertiv, have been suffering from the ongoing sell-off by investors who have been spooked by the U.S. President Donald Trump’s tariffs on leading trade partners and the health of the economy. Vertiv offers digital infrastructure for data centers, communication networks, and commercial and industrial environments. 

Vertiv’s YTD Performance

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VRT shares are currently overvalued, as suggested by its Value Score of C.

In terms of the 12-month price/book ratio, VRT is trading at 13.51, higher than its median of 11.22 and the sector’s 9.83.

Price/Book Ratio (TTM)

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Technically, Vertiv shares are trading below the 50-day and 200-day moving averages, indicating a bearish trend.

VRT Shares Trade Below 50-Day & 200-Day SMAs

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Does the dip make VRT a good buy despite a high valuation? Let us dig deeper to find out.

Vertiv Benefits From Expanding Portfolio

VRT’s extensive product portfolio, which spans thermal systems, liquid cooling, UPS, switchgear, busbar and modular solutions, is aiding its prospects. The backlog at the end of 2024 was $7.18 billion, up roughly 30% over 2023. In the trailing 12 months, organic orders grew approximately 30%, with book-to-bill of 1.2 times for 2024.

The Vertiv PowerUPS 9000 is a cutting-edge solution tailored for high-performance IT applications that has expanded VRT’s data center power solutions portfolio. VRT has expanded its liquid cooling product line with its Vertiv CoolChip CDU (coolant distribution unit) systems. These systems allow data centers and colocation providers to manage multiple high-density racks with just one CDU. 

Strong capital expenditure spending plans by hyperscalers on data center capacity expansion bodes well for Vertiv. VRT’s rich partner base, which includes the likes of Ballard Power Systems BLDP, Compass Datacenters, NVIDIA NVDA, Intel INTC and ZincFive, is a key catalyst.

Vertiv is proactive in acquisitions, most recently acquiring centrifugal chiller technologies from BiXin Energy Technology (Suzhou) Co. Ltd., a China-based company specializing in chillers, heat pumps and air-handling units. This move has expanded VRT’s chiller portfolio, enhancing its solutions for high-performance computing and AI globally.

VRT’s 2025 Net Sales & Earnings to Rise Y/Y

For 2025, Vertiv expects its data center segment to accelerate globally, supported by the continued strong AI-driven demand. Based on backlog and visibility into a strong pipeline, the company expects the 2025 organic sales growth rate between 15% and 17%, suggesting a slight dip from the 18% growth reported in 2024. 

Net sales for 2025 are expected to be $9.13-$9.28 billion. The Zacks Consensus Estimate for VRT’s 2025 revenues is pegged at $9.22 billion, indicating year-over-year growth of 15.07%.

Adjusted operating profit is expected between $1.91 billion and $1.96 billion, whereas the adjusted operating margin is anticipated to be 20.8-21.2%. Notably, Vertiv’s 2024 operating margin expanded 410 basis points on a year-over-year basis to 19.4%.

Adjusted earnings are expected between $3.50 and $3.60 per share. The consensus mark for VRT’s 2025 earnings is pegged at $3.59 per share, up by a penny over the past 30 days, indicating year-over-year growth of 25.96%.

The adjusted free cash flow is expected to be $1.28-$1.33 billion for 2025. VRT reported an adjusted free cash flow of $1.14 billion in 2024.

Vertiv’s Q1 Earnings Estimates Show Steady Trend

For first-quarter 2025, adjusted earnings are expected between 57 cents and 63 cents per share. The consensus mark for VRT’s earnings is pegged at 62 cents per share, unchanged over the past 30 days, indicating year-over-year growth of 44.2%.

Vertiv expects net sales of $1.9-$1.95 billion. The Zacks Consensus Estimate for revenues is pegged at $1.92 billion, indicating year-over-year growth of 16.9%.

Adjusted operating profit for first-quarter 2025 is expected between $315 million and $335 million. The adjusted operating margin is anticipated to be 16.7-17.1%.

VRT beat the Zacks Consensus Estimate in the trailing four quarters, the average earnings surprise being 13.67%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Conclusion

Vertiv is benefiting from its strong portfolio and rich partner base, which are driving order growth. The solid top-line growth potential justifies a premium valuation.

VRT currently has a Zacks Rank #2 (Buy) and a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. 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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