nVent shares slip despite strong Q4 earnings and bullish 2026 guidance
Electrical solutions provider posts 42% revenue growth and raises dividend, but margin concerns weigh on investor sentiment
nVent Electric plc delivered robust fourth-quarter results that surpassed analyst expectations and issued optimistic guidance for 2026, yet investors sold off the shares on Thursday amid concerns about profit margins and the sustainability of AI-driven demand.
The London-based electrical solutions provider reported net sales of $1.1 billion for the fourth quarter of 2025, representing a 42% year-over-year increase that exceeded Wall Street estimates of approximately $1.005 billion. On an organic basis, sales grew 24%, driven by strong demand from data center operators and power utilities. Adjusted earnings per share reached $0.90, up 53% from the prior year and beating expectations by roughly 1.8%.
The strong quarterly performance capped a transformative fiscal year for the industrial company. Full-year 2025 sales climbed 30% to $3.9 billion, while adjusted EPS increased 35% to $3.35. Free cash flow from continuing operations surged 31% to $561 million, reflecting improved operational efficiency.
"Our performance in 2025 demonstrates the strength of our portfolio and the significant opportunity ahead as we help our customers build a more sustainable and resilient electrical infrastructure," the company stated in its earnings release.
Looking ahead, nVent issued guidance for fiscal 2026 that projects reported sales growth of 15% to 18% and adjusted EPS in the range of $4.00 to $4.15. The company anticipates organic sales growth of 10% to 13%, signaling continued demand for its electrical connection and protection solutions. For the first quarter of 2026, nVent expects reported sales growth of 34% to 36% with adjusted EPS between $0.90 and $0.93.
The board also approved a dividend increase to $0.21 per share, payable during the first quarter, up from $0.20 in the prior quarter. This marks the company's commitment to returning capital to shareholders amid strong cash generation.
Despite the headline-beating results and upbeat guidance, nVent shares fell 2.42% in Thursday trading, opening at $115.46. The decline comes after the stock reached an all-time high of $119.43 on February 3, suggesting some investors engaged in profit-taking following a substantial run-up.
Several factors likely contributed to the market's muted reaction. Analysts have noted year-over-year margin contraction despite the overall growth trajectory, raising questions about profitability as the company scales. Additionally, investors are scrutinizing whether the current boom in data center capital expenditure—particularly for artificial intelligence infrastructure—can be sustained at current levels.
The company has benefited significantly from increased spending on power infrastructure to support AI computing facilities, with its liquid cooling solutions for data centers emerging as a key growth driver. However, some market participants worry about the cyclical nature of such spending and potential pricing pressures if revenue growth moderates.
Macroeconomic headwinds have also weighed on sentiment. nVent previously cited tariffs and inflation as factors that negatively impacted adjusted operating income in the third quarter of 2025, with these headwinds expected to reduce full-year 2025 profit by approximately $90 million.
Despite the near-term stock volatility, analysts maintain a broadly bullish stance on nVent. The stock carries a consensus "Buy" rating from analysts, with an average one-year price target around $124, implying potential upside from current levels. Of the analysts covering the company, 13 rate it a Buy while one recommends Hold, with no Sell ratings.
The company's two primary business segments delivered divergent performance in fiscal 2025. Systems Protection, which includes solutions for industrial and electrical infrastructure applications, generated $2.6 billion in sales, up 42% with 17% organic growth. The Electrical Connections segment reported $1.3 billion in sales, a more modest 10% increase with 6% organic growth.
nVent's strong results and guidance underscore the company's position as a key beneficiary of broader trends reshaping the global electrical infrastructure market, including the transition to renewable energy, the expansion of data center capacity, and increasing focus on electrical safety and reliability. However, the stock's pullback Thursday reflects investor caution about valuations after a significant rally and uncertainty about the durability of certain growth drivers.