Vertiv makes the power and cooling equipment inside data centers, from backup power to the liquid cooling that AI chips now need. After a second-quarter miss, the third quarter answered the doubts: sales up 61%, orders more than doubled and guidance raised again. The shares jumped 16% to $243, which still prices in far more growth than the model.
Today’s close against the report’s numbers, updated every weekday. The analysis is as of October 29, 2026; the rating as of October 29, 2026. Both change only when the report is revised.
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 29, 2026, the day after its third-quarter results. Figures are from the company’s filings and releases unless noted. Not investment advice. The author holds VRT shares. Earlier published versions, kept unchanged: October 20, 2026 (Hold, value $117).
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.
Third-quarter sales rose 61% to $4.31 billion, 55% organically, and adjusted EPS rose 78% to $2.21, $0.41 above the company’s own guidance. Management said $100–150 million of sales that slipped out of the second quarter were delivered in this one, so part of the beat is the earlier miss catching up. Organic orders more than doubled, though Vertiv gave only the growth rate and said it will stop disclosing order figures. Adjusted operating margin was 25.2%, and adjusted free cash flow $652 million.
Full-year guidance rose again: sales of $14.45–14.85 billion, 37–39% organic growth, a 24% adjusted operating margin, adjusted EPS of $7.10–7.20 and $2.6–2.8 billion of adjusted free cash flow. The fourth quarter is guided to about $4.4 billion of sales, up about 50% organically. Management would not give 2027 numbers but expects growth well above the market. The shares rose 16% on the day.
| 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. At the end of September it held $3.7 billion of cash and short-term investments against $2.9 billion of debt, about $0.8 billion of net cash, with $6.2 billion of liquidity. It keeps buying bolt-on businesses: in the quarter it announced UtilityInnovation Group (microgrids and power controls) and King Environmental Services (load testing in Europe).
This update starts from the higher 2026 guidance and assumes faster growth in 2027: the fourth-quarter guidance alone is a run-rate of about $17.6 billion a year, 20% above 2026, and orders doubled. The margin path moves up half a point in line with the new guidance.
| Assumption | Base case | Basis |
|---|---|---|
| Sales, 2026 | $14.65B | Guidance midpoint |
| Growth, 2027 and 2028 | 30%, then 16% | Orders doubled and a fourth-quarter run-rate 20% above 2026, then slowing |
| Operating margin | 23% rising to 25% | 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 | 15% / 8% | 30% / 16% | 40% / 22% |
| Long-run operating margin | 21% | 25% | 27.5% |
| Discount rate | 14.1% | 13.1% | 12.1% |
| Value per share | $72 | $131 | $208 |
| Probability | 25% | 50% | 25% |
Weighted 25/50/25: $136.
| Discount rate | 9.0% | 10.0% | 11.0% | 12.0% |
|---|---|---|---|---|
| Value per share | $230 | $195 | $169 | $149 |
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 36% a year in 2027 and 2028 | 30% and 16% |
| A long-run operating margin near 46% | 25% |
| A discount rate of about 8.7% | 13.1% |
| Risk | Why it matters |
|---|---|
| Execution | The third quarter recovered the second-quarter shortfall; the fourth quarter has to deliver about 50% organic growth. |
| Visibility | Vertiv now gives only the growth rate of orders and will stop disclosing them, so 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: orders that doubled point to 2027 growth above the base case, and 800-volt DC power products, due to start earning revenue in 2027, could raise content per data center.
Demand for Vertiv’s power and cooling equipment is not in doubt, and the third quarter, with 55% organic growth and orders more than doubled, showed it can deliver. The price rose further than the model’s value and assumes growth and margins above even the bull case.
What would change the value: Fourth-quarter organic growth against the guided 49–51%, the first 2027 guidance in February and margins above 25% are the inputs to watch.
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 $136. 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 46% 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 | 54.7× | 38.4× | 5 of 5 | Worse than the median |
| Free cash flow yield | 3.1% | 3.1% | 3 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; the price already assumes it lasts.
| What | Figures | Source |
|---|---|---|
| Latest results | $4.31B (Sales, Q3 2026, +61%), 55% (Organic growth), 100%+ (Organic order growth), 25.2% (Adjusted operating margin) and others | Q3 2026 results; Earnings call summary; Q2 2026 results |
| The numbers (five-year table) | Five years of annual figures and the last twelve months | SEC XBRL company facts; latest: 10-K for the period to 2025-12-31, 10-Q for the period to 2026-06-30 |
| Price at writing | $242.94 (Close, October 28, 2026) | Yahoo Finance; the time of the quote is stated beside the price |
| Discount rate inputs | 10-year Treasury 5.15%, equity risk premium 4.5% | Fixed for every report so they can be compared; How ratings work |
| Valuation | Every value, case and sensitivity | This site’s model: XLSX, CSV |
| Checked by hand | Not yet | Reports are added to the audit log as they are revised |
| Input | Bear (10th percentile) | Base (median) | Bull (90th percentile) |
|---|---|---|---|
| Growth, first forecast year | 15.0% | 30.0% | 40.0% |
| Growth, second forecast year | 8.0% | 16.0% | 22.0% |
| Operating margin, near term | 21.5% | 23.0% | 24.0% |
| Operating margin, long run | 21.0% | 25.0% | 27.5% |
| Discount rate | 14.1% | 13.1% | 12.1% |
| Simulation result | |
|---|---|
| Expected value (average of 4,000 runs) | $131.17 |
| Likely range, 10th to 90th percentile | $84.59 to $180.72 |
| Median | $128.48 |
| Chance the value is above the price | 1% |
| Chance it is cheaper than the S&P 500 | 18% |
Each input is drawn from a split normal: its bear and bull values are the 10th and 90th percentiles, so the two sides can differ. Business inputs share a common factor (correlation 0.6); the discount rate moves on its own. Inputs not listed are held at their base value. How the simulation works.