There are good things about the Hubbell (HUBB) story, including the company's leverage to still-healthy utility markets and recovering industrial markets. The company generates decent cash flows, and while I don't like the lighting business nor the Aclara metering business all that much, I believe expectations have largely reset there.
What hasn't been so good is the margin story, with no real leverage there in several years. Management continues to talk a good game on cost-cutting/efficiency opportunities, but with non-resi markets looking weaker in 2021, executing on those opportunities is even more important.
I wasn't all that excited about these shares back in August of 2020, and since then they've largely tracked the larger industrial space, also underperforming more direct comps like ABB (ABB), Eaton (ETN), nVent (NVT) and Schneider (OTCPK:SBGSY). While Hubbell has been more cyclical in the past than these comps, and should have decent leverage to industrial end-market recoveries, the shares continue to look quite average in terms of return potential.
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With Weaker Non-Resi Markets, Hubbell's Self-Help Story Is More Important Than Ever
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