Hubbell Incorporated (HUBB) is a manufacturer of utility and electrical products. The company is expected to benefit from the trends towards electrification and grid modernization, which are still in the early stages in the US and globally. Based on past performance and recent quarterly earnings, HUBB is a solid investment prospect.
HUBB’s stock has shown consistent growth over the past 20 years, with share prices doubling that of the S&P 500. In addition, HUBB’s stock has broken through key technical levels, reaching a series of fresh highs, without risking overvaluation.
Growth Opportunities
Compared to other investment opportunities, HUBB is a stable, proven choice to help investors benefit from growth in the solar, wind, nuclear, EV, and broadband industries. Hubbell’s 135-year history of earnings and revenue growth makes it a sound investment prospect, with two main business categories, Utility and Electrical Solutions.
Hubbell has a number of different product categories, including lighting and controls, wiring and electrical, power and utilities, and datacom, that allow them to serve a broad range of utility and electrical needs. It has several solution offerings, including energy savings, safety and security, extreme environment, wire, and cable management.
Growth Outlook
HUBB grew its earnings and revenue last quarter, exceeding Zacks’ estimates by a significant margin. The company is projected to post impressive growth in FY23, which is currently estimated at 30%, with 8% sales expected to reach $5.36 billion. Last year saw an 18% increase in sales and 14% growth in 2021 across the double-digit EPS gains. HUBB’s long-term outperformance and sustained growth mean that even as it trades near its peak in terms of price, it does not appear too stretched valuation-wise. It is trading in line with its 10-year median and is 16% off its own highs, indicating that the stock is undervalued.
The fact that the company raised its dividend rate (by 7%) for 15 consecutive years, with a current yield of 1.6%, suggests that it consistently performs well financially and values shareholder satisfaction. This is another positive signal to investors. With a solid balance sheet, HUBB also has the potential to continue expanding through strategic acquisitions while remaining a strong dividend payer.
(Disclosure: Ben Rains owns HUBB in the Zacks Alternative Energy Innovators service)
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