Vertiv Holdings is the IBD Stock Of The Day for Monday. The data center and communications network technology leader is powering up for a breakout after consolidating for the past 12 weeks. VRT stock edged lower Monday.
Vertiv provides IT infrastructure and maintenance services for data centers, cloud networks and commercial and industrial customers. The company manufactures power and thermal management devices, as well as hardware and software for data center equipment. It also offers a range of preventive maintenance, testing, training and monitoring services.
Columbus, Ohio-based Vertiv employs roughly 24,000 people and operates in more than 130 countries, according to the latest company filings. And Vertiv is starting to fuel up after sales growth increased the past two quarters.
Vertiv's earnings are due early Wednesday, Feb. 22. For the fourth quarter, analysts expect earnings to skyrocket 700% to 32 cents per share on 19% revenue growth to $1.681 billion, according to FactSet. The results would mark a second straight quarter of accelerating profit and the third consecutive period of double-digit sales growth.
The company expects that momentum to carry throughout the year. For 2023, Vertiv forecasts an adjusted operating profit of $740 million , up 61% from the projected $458.4 million for 2022. Wall Street expects the company's earnings to nearly double to $1.13 per share in 2023, from the projected 56 cents per share for 2022. Fiscal 23 sales are seen rising 6% to $6.07 billion, from $5.7 billion in 2022.
VRT Stock
VRT stock is in a "consolidation," which is a catchall term for attractive chart patterns that don't quite conform to proper base definitions. Vertiv shares peaked just below 29 in September 2021. The stock has rebounded nearly 84% from a July low.
MarketSmith shows an official buy point at 16.17. But VRT stock found support at its 50-day moving average in the past few weeks. And investors could plot an early entry above 15.63. Shares first need to retake support at their 10-day moving average and reclaim their 21-day exponential moving average.
Vertiv Holdings has a 45 RS Rating out of a possible 99, as the company's relative strength line has fallen compared to its peers in recent weeks. VRT's RS Rating rose to 85 at the end of January. It has a 34 EPS Rating, as earnings still need to pick up steam. And VRT stock has a 45 Composite Rating, which combines a number of technical indicators into one easy-to-read score.
Debt is a factor to consider in the company's Q4 results. Vertiv's long-term debt ended the September quarter at $3.2 billion. That gives it a debt-to-equity ratio of more than 200% — far out of scale with that of its industry peers. Vertiv reported modest cash holdings of $258 million.
VRT stock slid about 2.4% on Monday and is down 3.8% the past month.
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