HUBBELL INC (HUBB): what the price requires

At today's price, HUBBELL INC (HUBB) is priced for +21.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/HUBB

Headline

FieldValue
TickerHUBB
CompanyHUBBELL INC
Current price$476.52/sh
CompositionGrid Infrastructure 47% / Grid Automation 16% / Electrical Products 15% / Industrial 22% / Retail and Builder 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed14.3%
Operating margin today19.4%
Margin compression implied-5.1pp
Implied growth21.1%
Multiple paid24x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.5pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+1.20σ
cohort percentile (of 177 peers)43
sustained it ~5 years at this level41%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.59x5expensive
Earnings3.34x5expensive
Relative1.21x5expensive
Growth1.22x3expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$365.501.30xyesFCF base $0.9B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.7%, 5yr projection
DCF Exit MultipleGrowth$473.871.01xyesExit EV/EBITDA: 17.0x / 19.0x / 21.0x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$397.771.20xyesP/E 22x (static sector reference · 2026-04), scenarios: 18.4x / 22.0x / 25.6x (bear / base = reference held flat / bull), EV/EBITDA 16x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$183.702.59xyesBV/sh $70.71, ROE (TTM) 24.0%, ke 9.3%
Two-Stage Excess ReturnAsset$296.501.61xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$389.731.22xyesRev $6.0B, growth 7% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.2x / 4.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$238.072.00xyesEPS $16.93, growth 14% (input: historical EPS growth), PEG=1.99 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$116.994.07xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.96B × (1−23%) / WACC 8.7% → EPV (no growth)
Residual IncomeAsset$269.441.77xyesBV $70.71 + 5yr PV of (ROE (TTM) 24.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$164.112.90xyes√(22.5 × EPS $16.93 × BVPS $70.71) — Graham's conservative floor
EV/EBITDA RelativeRelative$394.261.21xyesEBITDA $1.45B × sector EV/EBITDA 16.0x
FCF YieldEarnings$142.463.34xyesFCF $909.3M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$135.773.51xyesSBC-adj FCF $0.88B (FCF $0.91B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$519.660.92xyesEPS $16.93 × (8.5 + 2×14.1%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$27.5517.30xyesBV $70.71 × (ROIC 3.4% / WACC 8.7%)
P/Sales SectorRelative$562.490.85xyesRevenue $6.00B × sector P/S 5.0x
PEG Fair ValueRelative$357.111.33xyesEPS $16.93 × (PEG 1.5 × growth 14.1% (input: historical EPS growth)) → PE 21.1x
Earnings YieldEarnings$183.032.60xyesEPS $16.93 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.1b
Net debt / NOPAT (after-tax)2.29x
Net debt / operating income (pre-tax)1.77x
Share count CAGR (buyback)-0.5%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The earnings trajectory is the bull case, and it is accelerating in the segments that matter. First-quarter organic sales grew 8%, led by double-digit growth in the Electrical Solutions segment and in grid-infrastructure products, where core transmission-and-distribution demand remained very strong. Grid infrastructure alone grew 12% organically, and data-center sales soared 40%, strong enough that management raised the full-year data-center growth outlook to over 25%. On that momentum, Hubbell raised full-year 2026 guidance to 8% to 11% total sales growth and 6% to 9% organic growth, with double-digit adjusted operating-profit growth expected at the midpoint. Margins are moving with the volume: the company's filing shows operating margin expanding, with adjusted operating margin rising toward the low twenties.

The demand behind the numbers is structural, not cyclical. Hubbell sits directly in the path of grid hardening, renewable-energy integration, data-center expansion, and industrial electrification, four secular forces that all require more of exactly the equipment it makes. The strength is broad: the filing attributes volume growth to "Strong substation, transmission and distribution markets". When utilities upgrade aging grids and data centers scramble for power, they buy the connectors, switches, and protection gear that Hubbell has spent a century building a position in.

The moat is the combination of breadth and specification. Hubbell's products are designed into utility and industrial systems, where reliability matters more than price and switching suppliers means requalifying components, which gives it pricing power and recurring replacement demand. Management has also pointed to a $1.5 billion addressable opportunity in high-voltage transmission at the 765 kV level over the next decade, a new lane within the grid buildout. The balance sheet supports the growth, with net debt at a modest 1.66 times operating income and a share count that has held steady. The bull case is a high-quality industrial compounder positioned at the center of the electrification capital cycle.

Bear Case

The most fragile assumption in Hubbell's price is a specific number: the growth rate baked into the multiple. At about 26 times operating income, the price embeds operating-profit growth of roughly 24.7% a year for five years. Set that against what management actually guides, 8% to 11% total sales growth and 6% to 9% organic, and the gap is the bear case in a single comparison. Even with double-digit adjusted operating-profit growth at the midpoint, the price is reaching for a compounding rate well beyond the company's own outlook. The implied figure is a directional bound, not a forecast, but the direction is clear: the price is paying for the electrification boom to run hotter and longer than the company's guidance assumes.

That makes the durability of the cycle the load-bearing risk. Data-center power demand growing 40% in a quarter is the kind of number that can pull forward years of growth and then normalize; utility grid spending moves in long waves driven by rate cases and capital budgets that can be deferred. The filing is candid that not every line is booming, attributing some softness to "volume declines in enclosures products primarily driven by prior weakness in the telecom market", a reminder that Hubbell's end markets are not uniformly strong and that demand in one category can stall while another surges. If the data-center buildout cools or utility capex plans slip, the growth that the price requires evaporates faster than the secular story suggests.

The valuation pattern confirms the stretch. Only the growth-DCF method reaches the price; the asset-value, earnings-power, and peer-multiple lenses all read it as richly valued on what the company earns today. That is the signature of a durability premium, a bet that this franchise compounds in a way the static frames cannot capture, and it is justified only if the growth materializes. The balance sheet is sound, with net debt at a manageable 1.66 times operating income, so this is not a solvency risk. It is a valuation risk: a premium price on a cyclical-secular industrial, where the premium evaporates if the cycle that is currently running hot reverts toward the mid-single-digit organic growth the company itself guides to.

Valuation

The price works out to roughly 26 times company-wide operating income, which inverts to operating growth of about 24.7% a year over a five-year stage. Read that as a directional bound rather than a precise solve, but it frames the entire bet. The number sits far above the 6% to 9% organic and 8% to 11% total sales growth management guides for 2026, which means the price is underwriting either a much longer runway of elevated growth than the near-term guidance, or margin expansion stacked on top of it, or both. The electrification tailwind is real; the question the price asks is whether it is worth a 26-times multiple.

The methods disagree in the way that makes the premium explicit. The asset-value lens, the earnings-power lens, and the peer-multiple lens all read the price as richly valued on what Hubbell earns today; only the growth-DCF reaches it. When a single forward-growth method is the only one that touches the price, the market is paying for durable compounding that the static frames structurally cannot price. For a company genuinely positioned in the grid and data-center buildout, that durability premium is defensible, but it is also the precise thing the buyer is betting on, because none of the methods grounded in current earnings supports the price on its own.

Solvency is the reassuring part of the close and not the crux. Net debt of about $2.1 billion runs at a modest 1.66 times operating income, with ample liquidity and a roughly flat share count, the balance sheet of a steady cash generator rather than a stretched one. The downside is not bounded by leverage; it is bounded by the demonstrated value of a high-quality industrial franchise and by how much of the electrification growth holds. The valuation rests on the durability of the grid and data-center demand cycle outrunning the company's own conservative-looking guidance, and that, more than any balance-sheet figure, is what the price is really paying for.

Catalysts

The demand-trend catalysts are clear and quantified. Data-center sales up 40% in the first quarter, prompting a raise in the full-year data-center growth outlook to over 25%, and grid infrastructure up 12% organically, are the two lines that drive the growth narrative. Each quarter's read on these segments against full-year guidance of 8% to 11% total sales growth will show whether the secular demand is accelerating, holding, or beginning to normalize. With the price embedding growth above guidance, any deceleration in data-center or grid orders is the catalyst that matters most.

The longer-horizon opportunity and the margin path round out the picture. Management has flagged a $1.5 billion addressable opportunity in 765 kV high-voltage transmission over the next decade, a structural lane that could extend the grid buildout, and progress on capturing it is a multiyear catalyst. On profitability, the company guides to GAAP diluted earnings per share of $17.45 to $18.00 for 2026, so the quarterly cadence of margin expansion and any pull-through from operating leverage are the numbers to track against that range. The next earnings call's commentary on order backlog and end-market breadth is where the durability of the demand cycle becomes legible.

Peer Cohorts (Per Segment, With Filing Citations)

Utility Solutions (reported)

Electrical Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 FY2026 results, 2026 · company FY2026 guidance · company materials, 2026 · company FY2025 10-K

View the full interactive HUBB report on boothcheck