Electrical products company Hubbell (NYSE:HUBB) has done a little better than I expected since my last article. I thought back in February that Hubbell was priced for performance in line with other industrials, and the 20% or so move since then is about five points better than the average industrial … though rivals in the electrical space like ABB (NYSE:ABB) and Eaton (NYSE:ETN) have done even better, Schneider (OTCPK:SBGSY) didn't do as well.
Hubbell’s guidance with second quarter earnings was positive on growth, and all of the electrical players are seeing strong demand in construction markets and improving demand in industrial markets. Hubbell may be doing even better in utilities, and with the passage of the infrastructure bill, more grid modernization and utility spending looks likely.
The only fly in the ointment is on the margin side, an area where Hubbell has had its challenges in the past, as cost inflation is creating some noticeable headwinds. While we’re currently in a market that is valuing growth above margins, that’s not been the case historically and I do have some concerns about an eventual re-rating. In any case, I do like Hubbell’s leverage to better demand trends across its markets, and it’s not as expensive as some names, but it’s not a stock I love.
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Hubbell Benefiting From Strong Outlook, Electrification Demand Is Sparking Across Its Markets
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