Hubbell Earnings: Grid Modernization, Investment Dollars Underpin Our 12%-Plus Fair Value Increase

Narrow-moat-rated Hubbell reported supreme second-quarter results, although the market was apparently disappointed. Investment dollars from legislation and grid modernization efforts are key to our long-term thesis, and strong price realization and supply chain recovery remain tailwinds to Hubbell's story. Given these strong trends, we've increased our fair value estimate by 12.5% to $322 per share. Management raised its guidance, but we think it's still conservative. We have lifted our long-term expectation for transmission and distribution to high-single-digit sales growth. While we think the stock remains fairly valued, there could be continued upside risks to our valuation.