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Hubbell Inc HUBB

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Morningstar’s Analysis

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Hubbell Performs Largely as We Expected as We Forecast a Rebound Heading Into 2021

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

Despite its stock’s sell-off during the trading day, nothing about narrow-moat Hubbell’s fourth-quarter 2020 results alters our long-term view of the stock. In fact, the company’s sales performed right in line with our fourth-quarter expectations, although we concede margins came in a bit lower than we were expecting. However, we’re unconcerned with these developments. Some of this variance, for instance, was due to the non-repeat of a benefit from tariff mitigation in electrical systems in the fourth quarter of 2019, which created a more difficult comp. While we’ve reset expectations, adding about 40 basis points in year-over-year top-line growth than we originally expected due to acquisitions and the time value of money more than offset these headwinds. Therefore, we raise our fair value estimate by $1 to $162 from $161. That said, we plan on re-evaluating our long-term assumptions further as we roll our model once Hubbell releases its form 10-K filing.

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Company Profile

Business Description

Hubbell is a diversified conglomerate industrial company that mostly competes in the electrical components market. Its products and services serve vital portions of the U.S. electrical supply chain, including transmission and distribution as well as the commercial, industrial, and residential end markets. The company organizes its business into two segments--electrical and power systems. The consolidated business sells about two thirds of its products via distributors, with the remainder sold via direct sales to utilities and contractors. The 2018 acquisition of Aclara, folded into the utility solutions segment, brought Hubbell a portfolio of smart meters and communication sensors that serves electrical, water, and gas utilities.

40 Waterview Drive
Shelton, CT, 06484
T +1 475 882-4000
Sector Industrials
Industry Electrical Equipment & Parts
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Classic Growth
Employees 19,100