Vertiv makes the power and cooling equipment inside data centers, from backup power to the liquid cooling that AI chips now need. Sales are guided up 30% this year, but the shares have fallen by almost half from their peak after a quarter that missed the company’s own growth range.
The cash-flow model’s bear-to-bull range, the probability-weighted value, the price and its 52-week range. The copper line marks the base case; the fine dotted line is today’s close.
Written on October 20, 2026, before its third-quarter results later this month. Figures are from the company’s filings and releases unless noted. Not investment advice. The author holds VRT shares.
Vertiv sells uninterruptible power supplies, switchgear and power distribution, thermal management (including liquid cooling for GPUs), and the service that keeps them running. Its customers are cloud companies, colocation operators and enterprises building data centers, now increasingly for AI.
As each rack of AI chips draws more power and generates more heat, the equipment Vertiv sells per megawatt rises. Its main competitors are Schneider Electric and Eaton.
Second-quarter sales rose 24% to $3.27 billion and adjusted EPS rose 60%, but organic growth of 17.8% fell short of the 20–24% the company itself had guided. Management blamed the timing of multi-phase projects and supply-chain sequencing and declined to size the shortfall; the stock fell 17% that day. It has also stopped disclosing orders and backlog.
At the same time it raised full-year guidance: sales of $13.8–14.2 billion, 30–32% organic growth and adjusted EPS of $6.65–6.75. That implies about 40% organic growth in the second half, which the third-quarter report will test.
| FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|
| Revenue | $5.0B | $5.7B | $6.9B | $8.0B | $10.2B | $11.5B |
| Operating margin | 5.2% | 3.9% | 12.7% | 17.1% | 17.9% | 18.9% |
| Net income | $0.1B | $0.1B | $0.5B | $0.5B | $1.3B | $1.7B |
| Operating cash flow | $0.2B | −$0.2B | $0.9B | $1.3B | $2.1B | $3.4B |
| Capital spending | $0.1B | $0.1B | $0.1B | $0.2B | $0.2B | $0.4B |
| Free cash flow | $0.1B | −$0.3B | $0.8B | $1.2B | $1.9B | $2.9B |
Operating margin rose from about 4% in 2022 to near 19% in the last twelve months, and free cash flow went from negative to over $2.9 billion.
Vertiv was formed from a private-equity buyout and carried heavy debt. It now holds about $2.8 billion of cash against $2.9 billion of debt, essentially net cash neutral, with $5.6 billion of liquidity. It is spending on bolt-on acquisitions in liquid cooling and services.
| Assumption | Base case | Basis |
|---|---|---|
| Sales, 2026 | $14.0B | Guidance midpoint |
| Growth, 2027 and 2028 | 25%, then 16% | AI build-out continues, then slows |
| Operating margin | 22.5% rising to 24.5% | Adjusted margin less acquisition amortization |
| Reinvestment | $1 for every $3 of new sales | Factories, working capital and acquisitions to add capacity |
| Discount rate | 13.1% | Beta 1.83, 4.5% premium |
| Terminal growth | 3.0% | With a 25% return on new capital |
| Bear | Base | Bull | |
|---|---|---|---|
| Growth, 2027 / 2028 | 12% / 8% | 25% / 16% | 35% / 22% |
| Long-run operating margin | 21% | 24.5% | 27% |
| Discount rate | 14.1% | 13.1% | 12.1% |
| Value per share | $65 | $117 | $188 |
| Probability | 25% | 50% | 25% |
Weighted 25/50/25: $122.
| Discount rate | 9.0% | 10.0% | 11.0% | 12.0% |
|---|---|---|---|---|
| Value per share | $205 | $174 | $150 | $132 |
Read. Vertiv’s beta of 1.83 gives it the highest discount rate of any holding. At 9%, the price is about fair.
Every figure in this valuation comes from one model script, rerun and checked against this page each time the site is built. The XLSX model rebuilds it in live formulas: change any blue input and every year’s cash flow, the bridge to the value, the scenarios and the sensitivity table recalculate.
| To reach today’s price, you need | Instead of |
|---|---|
| Sales growth of about 33% a year in 2027 and 2028 | 25% and 16% |
| A long-run operating margin near 42% | 24.5% |
| A discount rate of about 9.0% | 13.1% |
| Risk | Why it matters |
|---|---|
| Execution | One quarter already missed its own range; another would hurt credibility further. |
| Visibility | With orders and backlog no longer disclosed, demand is harder to check. |
| Data-center spending | Results depend on a small number of very large customers’ build plans. |
| Competition | Schneider, Eaton and new liquid-cooling entrants are chasing the same projects. |
Upside: a third quarter that delivers the guided 34–36% organic growth would show the miss was timing, and the stock is already 46% below its high.
Demand for Vertiv’s power and cooling equipment is not in doubt; delivering it on schedule is, after a quarter below its own growth range.
What would change the value: Third-quarter organic growth against the guided 34–36% second-half pace is the main test.
Ranges, not three cases. The expected value is the average of 4,000 runs of this report’s own model, with every input drawn from a range: the base case is the middle, and the bear and bull cases are the 10th and 90th percentiles. Business inputs move together; the discount rate moves on its own. The 25/50/25 weighting in the valuation section gives $122. How the ranges work
Two different questions. The rating is relative: it asks whether the stock is cheaper or dearer than the S&P 500 on the same assumptions. The absolute view asks whether it is worth its price at all: on its own the stock trades above our estimated value, which is 42% below the price.
On the same assumptions every report uses (a 5.15% Treasury yield and a 4.5% equity premium), the S&P 500 itself is worth about 68% of its price. The rating compares each stock with that: Buy if it is at least 15% cheaper than the market on this basis, Sell if at least 15% dearer, Hold in between. It is the same rule for every company, whoever owns it. The rating depends on that assumption: it would be Hold if the index grows 6% a year and Sell at 10%, against 8% here. How ratings work
| Measure | Vertiv | Industry median | Rank | |
|---|---|---|---|---|
| Revenue growth, last fiscal year | 27.7% | 6.6% | 2 of 6 | Better than the median |
| Operating margin | 18.9% | 17.6% | 3 of 6 | Better than the median |
| Price to earnings | 43.5× | 37.4× | 5 of 6 | Worse than the median |
| Free cash flow yield | 3.9% | 3.3% | 1 of 6 | Better than the median |
Peers: the 5 other S&P 500 companies in Electrical Components & Equipment with complete data (AME, BE, EMR, ETN, ROK). Last twelve months where reported, from SEC filings; prices from the latest close. A lower price-to-earnings ratio ranks higher. These figures update with each data run; the rating does not.
Demand is not the issue; delivering it on schedule is.