Long-established in the Industrial Products industry, Vertiv Holdings Co (VRT, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 1.87%, juxtaposed with a three-month change of 86.53%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Vertiv Holdings Co.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 5/10
- 2. Profitability rank: 4/10
- 3. Growth rank: 0/10
- 4. GF Value rank: 1/10
- 5. Momentum rank: 6/10
Based on the above method, GuruFocus assigned Vertiv Holdings Co the GF Score of 52 out of 100, which signals poor future outperformance potential.
Vertiv Holdings Co: A Snapshot
Vertiv Holdings Co, with a market cap of $14.9 billion, brings together hardware, software, analytics, and ongoing services to ensure its customers' vital applications run continuously, perform optimally, and grow with their business needs. The company solves the important challenges faced by data centers, communication networks, and commercial and industrial facilities with a portfolio of power, cooling, and IT infrastructure solutions and services that extends from the cloud to the edge of the network. Its services include critical power, thermal management, racks and enclosures, monitoring and management, and other services. Its three business segments include the Americas, Asia Pacific; and Europe, Middle East & Africa. The company's sales stand at $6.39 billion with an operating margin of 9.58%.
Financial Strength Analysis
Vertiv Holdings Co's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.09 indicates a struggle in handling existing debt levels. Additionally, the company's debt-to-Ebitda ratio is 4.03, which is above Joel Tillinghast's warning level of 4 and is worse than 73.54% of 2086 companies in the Industrial Products industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Profitability and Growth Prospects
Vertiv Holdings Co's low Profitability rank can also raise warning signals. A lack of significant growth is another area where Vertiv Holdings Co seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by 0 per year over the past three years, which underperforms worse than 0% of 2672 companies in the Industrial Products industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Vertiv Holdings Co has a strong reputation in the industry, these metrics suggest that it may struggle to maintain its historical performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
