Why Shares of nVent Electric Are Powering Higher This Week

What happened

Charged up about its latest quarterly earnings report, investors are bidding up shares of electrical connections specialist nVent Electric (NVT +1.27%) this week. But that's not all. Management's encouraging outlook for 2023 and analysts' endorsements for the stock are also contributing to the stock's rise.

As of 2:23 p.m. ET today, shares of nVent Electric have risen 11.3% since last Friday, according to data provided by S&P Global Market Intelligence.

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NYSE: NVT

nVent Electric Plc

Today's Change

(1.27%) $2.17

Current Price

$172.91

Key Data Points

Market Cap

$28B

Day's Range

$168.50 - $173.82

52wk Range

$63.15 - $175.00

Volume

3.3K

Avg Vol

2.3M

Gross Margin

37.01%

Dividend Yield

0.47%

So what

Booking fourth-quarter 2022 revenue of $742 million, nVent Electric beat analysts' expectations that the company would report $711 million on the top line. The company's better-than-expected sales wasn't the only surprise, though. Whereas analysts estimated that the company would report earnings per share (EPS) of $0.58, nVent Electric reported adjusted EPS of $0.66. And it wasn't only the income statement where investors found a reason to celebrate. The company reported Q4 2022 free cash flow of $180 million, representing a year-over-year increase of 77%.

According to management, the coming year will provide growth on both the top and bottom lines of the income statement. While the company forecasts a year-over-year rise in revenue of 3% to 5%, it sees sharper adjusted EPS growth: 5% to 9%.

Inspired by the company's earnings report, analysts took to boosting their price targets on nVent Electric's stock.

• Julian Mitchell, an analyst at Barclays, hiked the price target to $53 from $50.
• RBC Capital's analyst Deane Dray raised the price target to $47 from $41.

Now what

While the company's success in surpassing analysts' revenue and earnings estimates is impressive, the more noteworthy feat is the substantial free-cash-flow growth. Besides recognizing the impressive free-cash-flow growth on a quarterly basis, it's worth acknowledging that the company generated free cash flow of $351 million in 2022 -- a company record. It will be interesting to see if the company can extend its impressive performance in 2023 as management forecasts.