Hubbell Earnings: Weak Results and Large Accretive Acquisition Offset One Another

Following narrow-moat Hubbell’s third-quarter earnings, we maintain our $322 fair value estimate. Revenue and adjusted operating income fell below our expectations during the quarter, though Hubbell fared worse at the operating income level. However, our expected value accretion from Hubbell’s Systems Control deal completely offsets the negative fair value impact from the weak quarter. Management also tightened its guide by lowering the midpoint of revenue, but raised the midpoint of earnings. That said, it had previously left itself plenty of cushion previously. Nonetheless, both the revised ranges look reasonable to us.