- Strong 2025 Financial Performance: Hubbell achieved 12% total sales growth, 19% adjusted operating profit growth, and 15% adjusted EPS growth, with Electrical Solutions reaching 20% adjusted operating margins for the first time.
- Grid Infrastructure Momentum: Utility Solutions delivered double-digit growth for the full year, driven by transmission and substation markets, with backlog visibility supporting high single-digit to low double-digit growth in 2026.
- Free Cash Flow and ROIC Strength: 2025 free cash flow margin hit 15%, ROIC reached 19%, and the company expects $900M–$1B free cash flow in 2026, with 90% conversion of adjusted net income.
- 2026 Guidance and Pricing Discipline: Organic growth of 5–7% and total sales growth of 7–9% projected, with $19.15–$19.85 adjusted EPS and mid-single-digit cost inflation, supported by price-cost productivity and $15M–$20M restructuring savings.
- Data Center and M&A Synergies: Data center growth expected at mid-teens (driven by modular power distribution), DMC acquisition to add $130M revenue with 40% margins, and a robust M&A pipeline with high-quality capital deployment plans.
Segment Performance
The Utility Solutions segment delivered strong performance in grid infrastructure businesses, with double-digit growth for the full year. The grid infrastructure business is expected to see high single-digit growth in transmission and substation, and mid-single digits in distribution. The backlog on the transmission and substation side looks good, with visibility into high single-digit to low double-digit growth throughout the year. The data center growth is expected to be in the mid-teens, driven by modular power distribution skid business and connectors and grounding products.
Outlook and Guidance
For 2026, Hubbell anticipates 5% to 7% organic growth, driven by strength in utility T&D, data center, and light industrial end markets. The company expects 7% to 9% total sales growth, $19.15 to $19.85 of adjusted earnings per share, and approximately 90% free cash flow conversion on adjusted net income. Analysts estimate next year's revenue growth at 5.3%, which is within the company's guidance range.
Valuation and Returns
With a P/E Ratio of 30.01 and an EV/EBITDA of 21.29, the market appears to be pricing in a certain level of growth and profitability. The company's ROIC is 13.93%, and ROE is 25.0%, indicating a strong return on equity. The Free Cash Flow Yield is 3.18%, which is a relatively attractive metric. The Net Debt / EBITDA ratio is 1.37, indicating a manageable level of debt.
Operational Highlights
The company's business is currently smaller, with more replacement projects, and has stabilized at a lower base. The book-to-bill ratio is around one, and modest growth is expected from here. The Aclara business has been reshaped, focusing on its strong position in the market, and expects margins to improve. The substation business is attractive, with a strong position and growth aided by data centers.
M&A and Capital Allocation
The M&A pipeline is still full, with multiples having gone up but returns on businesses still being good due to growth rates. The company sees the entire pipeline and is very active in it. The DMC acquisition is expected to add $130 million in revenue with 40% operating margins, net of integration costs.