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NVT shares tumble 5% in pre-market following top line miss; Does the pullback represent a buying opportunity?

AInvestTuesday, Feb 6, 2024 8:55 am ET
2min read

nVent Electric (NVT) announced its fourth quarter earnings, showcasing a robust financial performance for 2023, underpinned by the rising demand for its electrification, sustainability, and digitalization solutions.  

The company's reported sales for the quarter reached $861 million, reflecting a 16% increase compared to the same period in the previous year. This figure did fall short of analyst expectations of approximately $866 million. On an organic basis, excluding the impact from acquisitions and currency fluctuations, sales increased by 2%. 

In terms of earnings per diluted share (EPS), nVent reported $1.51, which represents a substantial 61% growth from $0.94 in the fourth quarter of the previous year. On an adjusted basis, the company achieved an EPS of $0.78, marking an 18% increase from $0.66. 

The full-year results for 2023 also demonstrated impressive growth for nVent. The company's reported sales for the year reached $3.3 billion, reflecting a 12% increase compared to the previous year. On an organic basis, sales grew by 3%. The full-year EPS was $3.37, representing a remarkable 42% growth from $2.38 in the prior year. On an adjusted basis, the company achieved an EPS of $3.06, showing a strong 28% increase from $2.40. 

nVent's strong financial performance throughout 2023 can be attributed to several factors. The company has benefitted from the increasing demand for its products and solutions driven by electrification, sustainability, and digitalization trends. Additionally, nVent's focus on innovation and new product offerings, as well as its ability to leverage the benefits of recent acquisitions, have contributed to its growth. 

Operating income for the fourth quarter of 2023 reached $160 million, marking a 28% increase from $125 million in the same period of the previous year. On an adjusted basis, segment income grew by 31%, reaching $189 million compared to $144 million in the fourth quarter of 2022. 

Looking ahead, nVent has issued its guidance for the full-year 2024. The company anticipates sales growth in the range of 8% to 10%. On an organic basis, sales are expected to increase by 3% to 5% compared to the previous year. 

nVent forecasts a GAAP EPS of $2.73 to $2.83 for 2024, while the adjusted EPS is projected to be in the range of $3.17 to $3.27. It is important to note that these EPS figures include an approximate negative impact of $0.11 due to changes in global tax standards.

For the first quarter of 2024, nVent estimates reported sales to grow by 16% to 18%, with an organic increase of 2% to 4%. The company also projects a GAAP EPS of $0.61 to $0.63 and an adjusted EPS of $0.72 to $0.74 for this period. These EPS figures include an approximate negative impact of $0.03 due to changes in global tax standards. 

Shares of NVT are down 6% in reaction to the news. Expectations were high as the company sits in an advantageous position as its products help with the cooling of data centers which are in hot demand due to the increase in AI. The technology uses a tremendous amount of energy and the products created by NVT help manage the cooling systems to allow the systems to run. NVT has significant support at the $58-60 area which is a level we would watch for an entry. 

In summary, nVent Electric plc has reported strong financial performance for the fourth quarter of 2023 and the full year. The company has demonstrated significant growth in sales and earnings, driven by increasing market demand, innovation, and successful acquisitions. With positive guidance for 2024, nVent is well-positioned for continued growth and profitability.

$NVT(NVT)

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