nVent: Low Valuation And Modest Upside As A Cyclical Turnaround Play

This is a tough time if you have considerable exposure to short-cycle industrials, non-resi construction, and oil/gas, and indeed nVent (NVT) is having a tougher go of it. While other players in the electrical space have benefited from leverage to utility grid spending, that's not the case at nVent, and the company's data center exposure really isn't enough to meaningfully counterbalance the significant pressures elsewhere in the business. On top of that, steep decremental margins are chewing into one of the few strengths of the investment story.

I haven't been positive on nVent for a while, and with the shares down another 20%-plus since my last update, underperforming the industrial sector and significantly underperforming peers/rivals like ABB (ABB), Eaton (ETN), Hubbell (HUBB), and Schneider (OTCPK:SBGSY), I don't feel as though I've missed much. Looking at the business now, though, this is a tempting short-cycle recovery play, albeit with some concerns about oil/gas and non-resi exposures. Given the performance gap with other short-cycle names (many of which also have oil/gas and non-resi risk), this is a name that I think maybe worth a lot more consideration now.

 

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nVent: Low Valuation And Modest Upside As A Cyclical Turnaround Play