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Price: $437.33
Discount category: Below intrinsic value
Next earnings: 2027-02-02
Next earnings is estimate: Yes
Company name: Hubbell
Sector: Electrical & utility products
About: Hubbell makes electrical and utility products. It has two segments. Utility Solutions sells products for the electric grid in two groups, Grid Infrastructure (transmission, distribution and substation products) and Grid Automation. Electrical Solutions sells electrical products for data center, industrial, commercial and residential markets. Hubbell bought DMC Power, a maker of swaged connection systems for substations and transmission, on October 1, 2025, and NSI Industries, a maker of electrical fittings and connectors, on June 9, 2026. Net sales were $5.84 billion in 2025 and $1.87 billion in Q3 2026. Its headquarters is in Shelton, Connecticut.
Thesis: The market prices Hubbell for the risk that growth slows after two large debt-funded acquisitions. Hubbell paid about $827 million for DMC Power in October 2025 and $3.0 billion for NSI Industries in June 2026. Total debt rose to $5.12 billion at September 30, 2026 from $2.33 billion at December 31, 2025. Electrical Solutions grew 22% organically in Q3 2026, mostly from data centers, while Grid Automation sales fell about 4%. So the market asks if data center demand and utility spending can last. For the gap to close, three things must be true. Hubbell must reach its 2026 adjusted EPS guidance of $20.40 to $20.60 and give 2027 guidance for more growth. NSI must keep its results ahead of the first plan, as the company said in Q3 2026. Free cash flow must reach about 90% of adjusted net income so that debt falls. The Q4 2026 report and the 2027 guidance, expected in early February 2027, are the next test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a slowdown in data center building or in utility spending on the grid.
Risks: Organic growth in Electrical Solutions depends on data center building. Organic sales of the segment rose 22% in Q3 2026. If data center spending slows, growth and margins can fall quickly. Total debt was $5.12 billion at September 30, 2026, up from $2.33 billion at December 31, 2025, after the NSI and DMC Power acquisitions. Net interest expense was $58.0 million in Q3 2026, up from $13.6 million a year earlier. Hubbell did not buy back shares in Q3 2026. Utility Solutions depends on utility spending on the grid. Grid Automation sales fell about 4% in Q3 2026. Lower utility budgets or delays of meter projects can slow this segment. Tariffs and raw material costs change Hubbell's costs. Hubbell expects more refunds of tariffs under the International Emergency Economic Powers Act, but the timing and the amount are not certain.
Balance sheet: Cash: $335M Debt: $5.1B Net debt: $4.8B Interest cover: 9.0× Undrawn credit line: $1.0B, to March 2030 Debt due within 12 months: $614M Hubbell funds itself with senior notes, term loans and commercial paper. Total debt was $5.12 billion at September 30, 2026: short-term debt and current debt of $613.8 million and long-term debt of $4.51 billion. Debt was $2.33 billion at December 31, 2025. The debt includes a $600 million term loan due 2028, a $900 million term loan due 2029, $313 million of commercial paper and senior notes. In October 2026, Hubbell repaid $300 million of the 2028 term loan with commercial paper. Cash was $334.5 million. Interest cover is operating income divided by net interest expense for the first nine months of 2026. The undrawn credit is the $1.0 billion revolving credit facility, which was undrawn at September 30, 2026 and is due in March 2030. Hubbell expects free cash flow of about 90% of adjusted net income in 2026. Its term loans require total debt of no more than 65% of total capital. As of 2026-09-30.
Checkpoints: Feb 2, 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2026 adjusted diluted EPS within $20.40 to $20.60, free cash flow near 90% of adjusted net income and 2027 guidance for more organic growth pass; weaker data center orders or lower guidance fail. 2027 (estimate): NSI integration and debt reduction. Pending. Watch: NSI results that stay ahead of the first plan and lower debt during 2027 pass; an NSI shortfall or higher debt fail.
Recent events: 2026-10-27: Hubbell reported Q3 2026 results. Net sales rose 25% to $1.87 billion, with 11% organic growth and 13% from acquisitions. Organic sales of Electrical Solutions rose 22%, led by data centers. Diluted EPS was $4.94, and adjusted diluted EPS rose 14% to $5.91. Free cash flow was $280 million. Hubbell raised its 2026 adjusted diluted EPS guidance to $20.40 to $20.60 and expects diluted EPS of $17.30 to $17.50. 2026-07-28: Hubbell reported Q2 2026 results. Net sales rose 15%, with 10% organic growth, and adjusted diluted EPS rose 12% to $5.52. The adjusted operating margin fell 50 basis points to 23.9%. Hubbell raised its 2026 adjusted diluted EPS guidance to $20.25 to $20.55. 2026-06-09: Hubbell completed the acquisition of NSI Industries for $3.0 billion in cash. It paid with a new $900 million term loan due 2029, $1.9 billion of senior notes and commercial paper. The notes were $500 million due 2031 at 4.650%, $700 million due 2033 at 4.900% and $700 million due 2036 at 5.150%. 2026-05-01: Hubbell agreed to buy NSI Industries, a provider of electrical fittings, connectors, components and wire management products, for $3.0 billion in cash. 2026-04-30: Hubbell reported Q1 2026 results. Net sales rose 11%, with organic growth of 8.2%, and adjusted diluted EPS rose 16% to $3.93. Hubbell raised its 2026 adjusted diluted EPS guidance to $19.30 to $19.85. 2026-02-03: Hubbell reported Q4 2025 results. Adjusted diluted EPS rose 15% to $4.73 in the quarter and 10% to $18.21 for 2025. Diluted EPS was $16.54 for 2025. Hubbell gave 2026 adjusted diluted EPS guidance of $19.15 to $19.85. 2025-10-01: Hubbell completed the acquisition of DMC Power for about $827 million, net of cash acquired. It paid with a new $600 million term loan and commercial paper.