What happened
Charged up about its latest quarterly earnings report, investors are bidding up shares of electrical connections specialist nVent Electric (NVT 1.65%) 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.
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.
