It has been about a month since the last earnings report for Vertiv Holdings Co. (VRT). Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Vertiv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Vertiv Q1 Earnings Beat Estimates, Net Sales Rise Y/Y
Vertiv delivered first-quarter 2026 adjusted earnings of $1.17 per share, up 82.8% year over year. The result beat the consensus estimate by 14.71%.
Net sales rose 30.1% year over year to $2.65 billion and came in slightly below the consensus level of about $2.657 billion. Acquisitions contributed 4% of the growth, and favorable forex contributed 3%.
Vertiv’s Regional Results Show a Split Growth Picture
The quarterly results reflected strong demand tied to data center deployments, with the Americas again serving as the growth engine. Americas posted revenue of $1.81 billion, up 53.1% year over year. Organic growth in the region was 44.3%, reflecting broad-based momentum across product lines tied to data center demand.
Asia Pacific (APAC) net sales were $513.7 million, up 14.9%, with 12.0% organic growth. Europe, Middle East and Africa (EMEA) remained the weak spot, with net sales of $321.4 million down 20.3% and organic net sales down 29.4%. Management characterized the softness as tied to prior-period order dynamics and said improving pipeline activity supports expectations for a return to year-over-year sales growth in the back half of fiscal 2026.
Product revenues (which accounted for 79% of total revenues) increased 29.8% year over year to $2.09 billion. Service revenues (21% of total revenues) increased 31.4% year over year to $558.3 million.
VRT’s Q1 Operating Details
Selling, general, and administrative (SG&A) expenses increased 31.9% year over year to $456.7 million. As a percentage of sales, SG&A expenses increased 110 basis points (bps) year over year to 15.9%.
Profitability expanded sharply in the quarter as higher volume translated into operating leverage. Adjusted operating profit increased 63.6% year over year to $550.9 million. Management noted that tariff headwinds persisted, but actions and countermeasures supported positive price-cost dynamics even after including tariff impacts. Adjusted operating margin was 20.8%, up 430 bps from the year-ago level, helped by productivity gains.
Americas adjusted operating profit surged 88.8% year over year to $490.2 million. APAC’s adjusted operating profit increased 47.5% year over year to $67.4 million. However, EMEA’s adjusted operating profit decreased 32% year over year to $53.5 million.
VRT Balance Sheet Flexibility Supports Growth Plans
As of March 31, 2026, Vertiv’s cash and cash equivalents balance totaled $2.15 billion compared with $1.72 billion as of Dec. 31, 2025. Long-term debt, net, was $2.92 billion, and management highlighted net leverage of about 0.2X, underscoring financial flexibility.
The company also detailed a balance sheet and financing actions that included a $2.1 billion senior unsecured notes issuance and updates to its revolving credit facility, positioning Vertiv to support capacity investments and strategic activity.
Operating cash flow was $766.8 million in the quarter compared with $1 billion in the previous quarter. Adjusted free cash flow was $652.8 million compared with $909 million reported in the previous quarter.
Vertiv Lifts 2026 Targets as Demand Stays Robust
Management raised 2026 guidance, pointing to sustained market momentum and accelerating capacity expansion. Vertiv now expects net sales of $13.5 billion to $14.0 billion, with organic net sales growth of 29% to 31% versus 2025.
The company guided to an adjusted operating profit of $3.14 billion to $3.26 billion and adjusted operating margin of 22.8% to 23.8%. Adjusted earnings are projected between $6.30 per share and $6.40 per share (50% to 52% year-over-year growth). Adjusted free cash flow is expected to be between $2.1 billion and $2.3 billion.
For the second quarter of 2026, Vertiv expects net sales of $3.25 billion to $3.45 billion (20% to 24% year-over-year growth) and adjusted earnings of $1.37 to $1.43 per share (44% to 51% year-over-year growth). Operating profit is expected between $690 million and $730 million with an operating margin in the 20.7%-21.7% range. VRT’s guidance reflected confidence in demand and execution as it continues investing in capacity, services and technology, supported by recent strategic acquisitions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Vertiv has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Vertiv has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Vertiv Holdings Co. (VRT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).