VRT Stock Study (2-19-26)

Posted by Mark on August 5, 2025 at 07:01 | Last modified: February 19, 2026 11:07

I recently did a stock study on Vertiv Holdings Co. (VRT, $243.21).

M* writes:

     > Vertiv has roots tracing back to 1946 when its founder, Ralph Liebert,
     > developed an air-cooling system for mainframe data rooms. As computers
     > started making their way into commercial applications in 1965, Liebert
     > developed one of the first computer room air conditioning, or CRAC,
     > units, enabling the precise control of temperature and humidity. The
     > firm has slowly expanded its data center portfolio through internal
     > product development and the acquisition of thermal and power
     > management products like condensers, busways, and switches. Vertiv
     > has global operations today; its products can be found in data
     > centers in most regions throughout the world.

Since 2018, this large-size company is all over the place [M* states it went public in 2020 despite price bars showing on the BetterInvesting® website for the two years prior]. Sales are positive since first recording any in 2020. EPS crosses zero four times, however. To sufficiently clean up the chart, I have to exclude 2017-2022 leaving a brief 3-year data history. Over that time, sales and EPS grow at annualized rates of 22.1% and 69.3%, respectively, with lines up, mostly straight, and parallel. Value Line (VL) gives Earnings Predictability score of 30 and Stock Price Stability score of only 10.

VRT is #6 on the “Top 40 Stocks Purchased by Investment Clubs” [in the past month] stock screen as of 2/10/26 (nod to the BetterInvesting® Weekly Update email). Personally, I do not think the stock passes visual inspection and would move on. M* writes, “spending on data centers has become more volatile and less predictable. Estimating Vertiv’s growth is therefore a highly erroneous exercise.” It also writes, “Vertiv’s financial history is somewhat limited given that it has changed ownership a number of times between public and private entities.” In case so many clubs are onto something here, I will proceed with the study. To be safe, perhaps give only speculative consideration for this stock with non-core position sizing.

Since 2023, PTPM leads industry averages while increasing from 7.8% to 17.0% (’25). ROE increases from 26.5% to 37.2% (’25). Debt-to-Capital decreases from 60.8% to 45.0% (’25). Three years seems very brief and too short for meaningful peers/industry comparison.

Quick Ratio is 1.12 and Interest Coverage is 21.2 per M* who assigns “Narrow” Economic Moat and gives a B grade for Financial Health (per BetterInvesting® website). VL rates the company B++ for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 46.1% and 28.9% [both percentages equal to below] for ’26 and ’27 (based on 22 analysts).
• Zacks gives YOY ACE 34.0% and 24.0% for ’26 and ’27, respectively (8 analysts).
• VL projects 11.8% annualized growth from ’24-’29.
• CFRA projects 32.8% YOY and 28.3% per year for ’26 and ’25-’27, respectively.
• M* offers a 2-year ACE of 25.9% and projects 16.6% per year from ’25-’30 (Equity Report).

I am forecasting below the range at 11.0% per year.

With regard to EPS growth:

• MarketWatch projects 39.3% and 34.2% per year for ’25-’27 and ’25-’28, respectively (based on 27 analysts).
• Nasdaq.com gives ACE 23.3% and 24.1%/year for ’26-’28 and ’26-’29 [7 / 8 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year annualized growth of 32.2%.
• Finviz gives ACE 5-year annualized growth of 33.4% (9).
• LSEG estimates LTG at 31.4%.
• YF gives YOY ACE 46.1% and 28.9% for ’26 and ’27, respectively (22) [something seems amiss as both equal to above].
• Zacks gives YOY ACE 46.9% and 30.2% for ’26 and ’27 (7) along with 5-year annualized growth of 31.0%.
• VL projects 40.5% annualized from ’24-’29 (most recent report is Dec ’25, however, and 2025 full-year earnings have since been announced. I will use VL’s $4.10 estimate for 2025 to get 14.3% instead).
• CFRA projects 43.8% YOY and 39.3% per year for ’26 and ’25-’27 along with 3-year CAGR of 28.0%.
• M* gives long-term ACE of 26.1% and projects 16.2% from ’25-’30 in Equity Report (using ’29 would give 29.4% but I am using the lesser).

My 14.0% forecast is below the long-term-estimate range (mean of seven: 26.4%). Initial value is ’25 EPS of $3.41/share.

My Forecast High P/E is 40.0. Over past three years, high P/E is 42.2, 114, and 59.4. The last-3-year mean average P/E is 46.0. I am just below the range.

My Forecast Low P/E is 15.0. Over past three years, low P/E is 10.0, 34.6, and 15.7. I am forecasting just below the median.

My Low Stock Price Forecast (LSPF) is $60.00. Default ($51.20) based on initial value from above seems unreasonably low at 78.9% less than the previous close but only 4.5% less than the 52-week low. My [arbitrary] selection is 75.3% less than the previous close and 11.9% greater than the 52-week low. My effective Forecast Low P/E is therefore $60.0 / $3.41 = 17.6.

Over the past three years, Payout Ratio (PR) is 2.1%, 8.8%, and 5.1%. I am forecasting below the range at 2.0%.

These inputs land VRT in the SELL zone with a U/D ratio of 0.1. Total Annualized Return (TAR) is 1.6%.

PAR (using Forecast Average—not High—P/E) of -5.7% is unthinkable as an investment candidate. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR but even that is far below the risk-free rate (T-bills).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 114 studies done in the past 90 days (65 outliers including mine excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 17.8%, 25.0%, 59.9, 31.1, and 4.7% respectively. I am lower across the board. VL [M*] projects a future average annual P/E of 32.0 [20.7 and 27.4 in ’29 and ’30, respectively] that is less than MS (40.5) and greater than mine (effectively 28.8).

MS high / low EPS are $7.13 / $2.65 versus my $6.57 / $3.41 (per share). My high EPS is less due to a lower growth rate. VL [M*] high EPS of $7.00 [$8.88 for ’30] is in the middle [soars above both].

MS LSPF of $87.30 implies a Forecast Low P/E of 32.9 versus the above-stated 31.1. MS LSPF is 5.9% greater than the default $2.65/share * 31.1 = $82.42 that results in more aggressive zoning. MS LSPF is a whopping 45.5% greater than mine.

MOS is robust in the study because my inputs are near or below historical/analyst/MS averages/ranges. Also backing this assessment are MS TAR exceeding mine by a gaudy 17.4% per year and a much greater LSPF.

With regard to valuation, PEG is 1.3 and 4.5 per Zacks and my projected P/E: diametrically opposed. I find it interesting that both Zacks and M* (0.8) do not find the stock overvalued although in a different section M* has it at two stars and overvalued by 32%. Based on a mere 3-year history, Relative Value [(current P/E) / 5-year-mean average P/E] is extremely high at 1.55. “Quick and Dirty DCF” calculates stock overvalued by ~28%.

This is a volatile stock with an inconsistent track record and unpredictable service/product demand as suggested by M*. I do believe lower quality can be offset by larger MOS, however, and this study has it.

Per U/D, VRT is a BUY under ~$110/share. BetterInvesting® TAR criterion would be met [262.8 / ((14.77 / 100 ) +1 ) ^ 5]
~ $132 given a forecast high price ~$263.

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