Vertiv Holdings Co (VRT)

Conclusion

Vertiv Holdings designs and services power management, thermal cooling and related critical infrastructure for data centers, communication networks and commercial and industrial sites. On 2026-11-09 the shares closed at 200.47 USD, giving a market capitalisation of 77.19 billion USD.

The verdict is fair. The fair value band runs from 160.40 to 240.60 USD with a midpoint of 200.50 USD, a margin of safety of 0.0%. The discounted cash flow gives 147.35 USD per share, while the fair value from historical multiples is 253.65 USD. Today's P/E of 36.8 compares with a ten-year median of 68.7, and EV/EBITDA of 25.3 with a median of 32.1. The price implies revenue growth of 20.6% a year, against a five-year revenue CAGR of 18.5% and a five-year free cash flow per share CAGR of 56.9%.

What holds the case up is the return on capital: ROIC of 40.1% against a WACC of 14.9%, and free cash flow conversion of 148.6% on a trailing basis. The balance sheet is net cash, at -0.15x net debt to EBITDA. What could break it is the share count, which has grown at 4.9% a year over five years. Price-to-sales of 5.89 compares with a median of 2.51, and the discounted cash flow sits below the current price.

Financial health

Financial strength is green, held up by the Altman Z-score, net debt, interest coverage and the current ratio. The current ratio is 1.39 and the quick ratio 0.93, with debt to equity at 0.59. Net debt to EBITDA is -0.15x, meaning net cash, and interest coverage is 30.8x. The Altman Z-score is 5.28, in the safe zone. The Altman model was designed for manufacturers, and Vertiv is partly one, so the reading is indicative. Insolvency risk: low, about 0.6% by the estimate of the Ohlson model over one to two years. Balance sheet figures are as of 2026-09-30, and the Ohlson estimate is based on 2025-12-31 figures.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is strong at 148.6% trailing and 146.9% over five years, and the accrual ratio is -7.3%, which is favourable. The weak points are dilution and stock-based compensation. Share count has risen at a compound 4.9% a year over five years, and free cash flow after stock-based compensation is 3.06 billion USD. The Piotroski score is 5 out of 9. The Beneish M-score is not available. Vertiv beat earnings estimates in 7 of the last 8 quarters, with an average surprise of 11.8%. Estimates are rising: the current-year estimate moved up 7.1% over 90 days, and the next-year estimate up 7.5%, with next-year growth expected at 35.5%.

Profitability

Profitability is green. Operating margin is 20.3% against a ten-year median of 5.0%, and net margin is 16.0% against a median of 0.7%. Gross margin is 38.1% against a median of 33.4%, and margin stability is 0.98. Most important is ROIC of 40.1% against a WACC of 14.9%, a ROIC minus WACC of 25.2 percentage points. Return on equity is 38.1%. The DuPont split (2025-12-31) shows a net margin of 13.0%, an asset turnover of 0.84 and an equity multiplier of 3.10. Part of the high return on equity therefore comes from leverage, but operating returns alone are strong.

Growth

Growth is green. Revenue has compounded at 21.6% a year over three years and 18.5% over five years. EPS has compounded at 156.4% a year over three years, and free cash flow per share at 56.9% over five years. Revenue grew in 8 of the 9 comparable years. Growth has been exceptional, but the forward estimates imply a slower pace than the three-year record, and that is what the price depends on.

Valuation

Valuation is yellow, with a neutral verdict. Against their own ten-year medians, P/E is 36.8 versus 68.7 (a premium of -46.5%), EV/EBITDA 25.3 versus 32.1 (-21.1%), and price to free cash flow 24.8 versus 37.4 (-33.8%). Price to sales is 5.89 versus 2.51 (a premium of 134.2%), and price to book 14.03 versus 12.40 (13.1%). The discounted cash flow gives 147.35 USD per share, using a discount rate of 15.41%, 20% initial growth and 2.5% terminal growth. The terminal value accounts for 39.8% of that result. The fair value band is an order of magnitude built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target. The reverse DCF implies 20.6% growth, against 18.5% revenue CAGR over five years. Dividend yield is 0.1%, with a payout of 3.1% of free cash flow.

Risks

The main risk is that growth slows toward the rate the market needs. Implied growth of 20.6% sits above the five-year revenue record of 18.5%, so any shortfall would weigh on the fair value band, which midpoints at 200.50 USD. A higher share count would dilute per-share returns; at 4.9% a year, it erodes the free cash flow per share on which the valuation rests. Price to sales of 5.89 against a median of 2.51 leaves little room if margins normalise. The discounted cash flow depends heavily on the terminal value, at 39.8%, so it should be read with caution. Not available: the Beneish M-score and a debt maturity schedule. The analysis also lacks revenue by segment, so it cannot show which product lines drive the growth.