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Valued at a market cap of $24.5 billion, Hubbell Incorporated (HUBB) designs, manufactures and sells electrical and utility solutions to commercial, industrial, utility, and telecommunications markets. The Shelton, Connecticut-based company’s products include plugs, receptacles, connectors, lighting fixtures, high voltage test and measurement equipment, and voice and data signal processing components.
Companies worth $10 billion or more are generally described as “large-cap” stocks, and HUBB fits right into that category, with its market cap exceeding this threshold. The company is a leading manufacturer of utility and electrical solutions, which enables its customers to operate critical infrastructure safely, reliably, and efficiently.
The electrical equipment company has declined 9% from its 52-week high of $481.35, achieved on Nov. 6. Nevertheless, it has gained 6.9% over the past three months, outperforming the broader Industrial Select Sector SPDR Fund’s (XLI) 3.3% increase over the same time frame.
Moreover, in the longer term, HUBB has rallied 35.1% over the past 52 weeks, outperforming XLI’s 20.6% returns. On a YTD basis, shares of HUBB are up 33.6%, surpassing XLI’s 19.6% gains over the same time frame.
To confirm its bullish trend, HUBB has been trading above its 200-day moving average for the past year. However, it has been trading below its 50-day moving average since mid-December.
On Oct. 29, shares of HUBB plunged 2.1% following its mixed Q3 earnings release. The company’s revenue of $1.44 billion increased 4.9% from a year ago but missed the consensus estimates by 2.7%. Meanwhile, its adjusted earnings increased 13.7% year-over-year to $4.49, which marginally exceeded the forecasted figure of $4.47.
Weaker telecom and utility distribution markets primarily contributed to the company’s revenue miss. Additionally, its organic sales declined by approximately 1%, and sales growth was completely driven by mergers and acquisitions. Nonetheless, solid operating margin expansion and double-digit growth in operating income aided the company’s bottom line and led to its earnings beat.
HUBB has underperformed its rival, Eaton Corporation plc (ETN), which gained 46.2% over the past 52 weeks and 44.1% on a YTD basis.
Given HUBB’s recent outperformance relative to its broader sector, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 11 analysts covering it, and the mean price target of $479.11 suggests a modest 9% premium to its current levels.
