Grid Spending Keeps The Lights On For Hubbell

I thought Hubbell (HUBB) was appropriately priced back in December, and the shares have since basically tracked the larger industrial group, with quasi-comparables like Eaton (ETN) and Schneider (OTCPK:SBGSY) doing better and ABB (ABB) doing worse (I say quasi-comparables as these are large, diversified multi-industrials), while nVent (NVT) also performed worse.

Hubbell is an intriguing mix of good near-term opportunities and significant near-term challenges. I’m not bullish on the prospects for non-resi construction or oil/gas through 2022 (around 40% to 45% of the mix), but I am bullish on utility spending (35% of revenue) and the company’s leverage to potentially more V-shaped recoveries in short-cycle industrial and resi construction. The shares aren’t “can’t miss” cheap in my model, assuming long-term revenue and FCF growth in the low-to-mid single-digits, but they do look priced for high single-digit to low double-digit annualized returns that are better than most of what I see in the industrial sector now.

Follow this link to the full article:
Grid Spending Keeps The Lights On For Hubbell