Hubbell Inc (HUBB)

Conclusion

Hubbell Inc makes electrical and utility products, including grid transmission and distribution components, smart meters and wiring devices for industrial, commercial and institutional buildings. On 2026-11-09 the share price was 441.57 USD, giving a market capitalisation of 23.33 billion USD.

The verdict is fair. The price-to-earnings ratio is 25.67 against a ten-year median of 24.78, a premium of 3.6%, and EV/EBITDA is 17.67 against 16.51, a premium of 7.1%. The discounted cash flow gives 393.75 USD per share, and the fair value from historical multiples is 406.55 USD. The fair value band runs from 320.12 to 480.18 USD, with a midpoint of 400.15 USD and a margin of safety of -9.4%, which means the price sits above the midpoint. The reverse DCF implies revenue growth of 9.36% a year, close to the 9.68% revenue CAGR delivered over five years and the 9.72% free cash flow per share CAGR.

The strongest numbers are ROIC of 11.75% against a WACC of 8.14%, interest coverage of 9.26 and a five-year free cash flow conversion of 98.2%. The weakest are net debt to EBITDA of 3.00, a price-to-sales ratio of 3.54 against a median of 2.41 (a premium of 46.7%), and ROIC below its five-year median of 16.26%. A further rise in leverage or a fall in returns would weaken the case most.

Financial health

Financial strength is green, held up by the Altman Z-score of 3.34 (safe zone), interest coverage of 9.26 and a current ratio of 1.53, and held back only by net debt to EBITDA of 3.00. The quick ratio is 0.78, and debt to equity is 1.25. The Altman model was designed for manufacturers, and Hubbell is one, so the zone applies. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years. The company's free cash flow is strong enough that net debt at three times EBITDA is manageable, but a fall in earnings would push that ratio up quickly.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 102.1% on a trailing basis and 98.2% over five years, and a negative accrual ratio of -1.9%, which means cash earnings are at least as strong as reported ones. Stock-based compensation is 0.55% of revenue, and free cash flow after it is 892 million USD. The share count fell at a compound rate of 0.35% over five years, which points to net buybacks. The Piotroski score is 6 of 9, and the Beneish M-score of -2.47 is read as unlikely to indicate manipulation. The company beat earnings estimates in seven of the last eight quarters, with an average surprise of 2.18%. Analysts raised next-year estimates in six of the last 30 days, against one downgrade, with next-year growth expected at 11.98%.

Profitability

Profitability is green. The operating margin is 20.26% against a ten-year median of 14.06%, the gross margin 35.4% against 30.6%, and the net margin 13.78% against 9.53%. ROIC is 11.75% against a WACC of 8.14%, and the given ROIC minus WACC value is 3.61%, so the company creates value. However, ROIC sits below its five-year median of 16.26%, so returns have eased. Return on equity is 22.14%, but the DuPont split shows an equity multiplier of 2.14 alongside a net margin of 15.18% and an asset turnover of 0.71 (2025 annual data). Much of the return on equity therefore comes from leverage rather than from the asset base.

Growth

Growth is green. Revenue has compounded at 5.71% over three years, 9.68% over five and 5.60% over ten. Earnings per share have grown faster, at 17.96% over three years, 20.78% over five and 13.23% over ten. Free cash flow per share compounded at 24.86% over three years, 9.72% over five and 14.07% over ten. Revenue grew in eight of the last ten comparable years. The five-year revenue rate is the one the reverse DCF is compared against, and it is close to the growth the price implies.

Valuation

Valuation is yellow, because the verdict is fair and the margin of safety is -9.4%. Against their own ten-year medians, the price-to-earnings ratio of 25.67 carries a premium of 3.6%, EV/EBITDA of 17.67 a premium of 7.1%, and price to free cash flow of 25.14 a premium of 6.5%. Price to sales (3.54 against 2.41, a premium of 46.7%) and price to book (5.68 against 4.55, a premium of 25.0%) are higher. The discounted cash flow gives 393.75 USD per share at a discount rate of 9.08%, with 57.8% of value in the terminal value, and the fair value from historical multiples is 406.55 USD. The fair value is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The dividend yield is 1.29% and the payout on free cash flow is 32.42%.

Risks

The main risk is leverage. Net debt to EBITDA of 3.00 leaves less room to absorb a downturn in utility or building-construction demand. A decline in ROIC toward its five-year median of 16.26% would weaken the value-creation case, which currently rests on a margin of 3.61% over the cost of capital. The premium on price to sales is large, so a slowdown in revenue growth would hit the valuation harder than the earnings figures suggest. Because 57.8% of the discounted cash flow value sits in the terminal value, small changes in the discount rate or long-term growth assumption would move the result. The analysis does not include a debt maturity schedule or revenue by segment, so refinancing risk and the performance of the utility and electrical businesses cannot be assessed separately.