Key Points
Fourth-quarter results, released on Feb. 11, were strong, with both revenue and earnings beating Wall Street's estimates.
2026 guidance crushed Wall Street's estimates on both the top and bottom line.
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Shares of Vertiv Holdings (NYSE: VRT), which specializes in providing cooling and power solutions for artificial intelligence (AI) data centers, soared 36.9% in February, according to data from S&P Global Market Intelligence. For context, last month the S&P 500 index edged down 0.9% and the tech-heavy Nasdaq Composite index dropped 3.4%.
Vertiv shares pulled back 5.2% on Tuesday, March 3, amid the market decline driven by the Iran war. But they are still up a whopping 50.9% year to date through March 3.
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Now, let's dig into why Vertiv stock had such a great February performance.
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A strong fourth-quarter report
On Feb. 11, Vertiv stock surged 24.5%. The catalyst was the company's release of its fourth-quarter 2025 report. Shares were already up 7.2% for the month before the earnings release. And after the earnings release, they moved up slightly through the remainder of the month.
In Q4, Vertiv's revenue grew 23% year over year to $2.88 billion. Organic revenue growth (growth in businesses owned for at least one year) was 19%. Revenue growth was primarily driven by robust demand for cooling and power solutions for artificial intelligence data centers.
Earnings per share (EPS), adjusted for one-time items, increased 37% year over year to $1.36, beating the Wall Street consensus estimate of $1.30. The company has exceeded analysts' expectations in four of the last four quarters.
I'd be remiss if I didn't mention a couple of powerful metrics: Vertiv's book-to-bill ratio and its cash flows. In the fourth quarter, the book-to-bill ratio was 2.9x, with backlog increasing to $15.0 billion, up 109% from the same period last year. A book-to-bill ratio over 1.0 indicates rising demand for a company's product.
Operating cash flow was $1.01 billion and adjusted free cash flow was $910 million, an increase of 136% and 151%, respectively, compared to the prior-year period.
Powerful 2026 guidance
Full-year 2026 guidance was, perhaps, an even bigger reason than the Q4 results for Vertiv stock shooting higher after the earnings release. Guidance crushed Wall Street estimates, particularly on the bottom line.
For 2026, management guided for the following:
- Revenue of $13.25 billion to $13.75 billion, with annual organic growth of 27% to 29%.
- Adjusted EPS of $5.97 to $6.07, which translates to annual growth of 43% at the midpoint.
Going into the earnings release, Wall Street had been modeling for 2026 revenue of $12.4 billion and adjusted EPS of $5.33. So, Vertiv sprinted by both expectations, with the profit guidance beat particularly large.
Notably, Vertiv is a Nvidia partner and has collaborated with the AI chip leader on several projects.
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Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Vertiv. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
