Vertiv trades at $270.65 per share and has stayed right on track with the overall market, gaining 8.9% over the last six months. At the same time, the S&P 500 has returned 11.7%.
Is VRT a buy right now? Find out in our full research report, it’s free.
Why Are We Positive on VRT?
Formerly part of Emerson Electric, Vertiv (NYSE:VRT) manufactures and services infrastructure technology products for data centers and communication networks.
1. Core Business Firing on All Cylinders
We can better understand Electrical Systems companies by analyzing their organic revenue. This metric gives visibility into Vertiv’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Vertiv’s organic revenue averaged 24.2% year-on-year growth. This performance was fantastic and shows it can expand quickly without relying on expensive (and risky) acquisitions. 
2. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Vertiv’s margin expanded by 32.1 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Vertiv’s free cash flow margin for the trailing 12 months was 25.7%.
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
Fortunately, Vertiv’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we think Vertiv is one of the best industrials companies out there. At $270.65 per share (or 34.9× forward P/E), is now the time to initiate a position? See for yourself in our full research report, it’s free.
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