What Happened?
Shares of electrical and electronic products company Hubbell (NYSE: HUBB) jumped 3.2% in the afternoon session after it agreed to acquire DMC Power, a provider of electrical grid components, for $825 million in cash. DMC Power provides critical connectors and tooling for utility substation and transmission markets. Hubbell's management stated the deal expands its presence in attractive markets, driven by growing power demand from datacenter buildouts and the need to upgrade aging infrastructure. The acquisition is expected to close by the end of 2025 and begin contributing to Hubbell's adjusted earnings per share in 2026. Supporting the stock's move was a broader rally in the Industrials sector, fueled by a favorable inflation report which raised hopes for a Federal Reserve interest rate cut.
After the initial pop the shares cooled down to $432.24, up 3.5% from previous close.
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What Is The Market Telling Us
Hubbell’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 3.2% on the news that the company reported mixed second-quarter financial results, where a miss on revenue overshadowed a strong earnings beat. The electrical products manufacturer posted revenue of $1.48 billion, which fell short of analysts' consensus estimates of $1.51 billion. This top-line miss appeared to concern investors more than the company's otherwise strong bottom-line performance. Hubbell reported adjusted earnings of $4.93 per share, significantly surpassing Wall Street expectations. Furthermore, the company raised its full-year earnings guidance to a range of $17.65 to $18.15 per share. Despite the positive earnings and improved outlook, the market's reaction suggested that the slowdown in sales growth weighed heavily on sentiment.
Hubbell is up 2.9% since the beginning of the year, and at $432.24 per share, it is trading close to its 52-week high of $472.12 from November 2024. Investors who bought $1,000 worth of Hubbell’s shares 5 years ago would now be looking at an investment worth $2,939.
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