nVent Electric plc : Powering Electrification

Published: 2025-06-25 06:19:32 ET NVT

Published on 06/25/2025 at 06:19

By Grégoire Legrand

Spun off from Pentair plc in 2018, nVent Electric plc operates as a global provider of electrical connection and protection solutions, headquartered in London with primary operational management based in Minneapolis, Minnesota. Today, the group is moving to a more focused, higher growth electrical connection and protection company after significant portfolio optimization in recent years and strategic acquisitions. Let’s take a closer look.

nVent operates through two primary business segments: Enclosures and Electrical & Fastening Solutions.

Enclosures segment: It focuses on protection solutions for electrical and electronic equipment, offering products such as electrical enclosures, climate control systems, and power distribution units. This segment targets data center operators, telecommunications companies, and industrial automation customers where equipment protection and thermal management are critical operational requirements. The segment has experienced significant growth driven by data center expansion and increasing demand for edge computing infrastructure. The group benefits from brands such as HOFFMAN, SCHROFF and TRACHTE.

Electrical & Fastening Solutions segment: It encompasses cable management systems, fastening solutions, and electrical connection products marketed primarily under the CADDY, ERICO and ILSCO brands. This segment serves electrical contractors, original equipment manufacturers, and industrial customers across diverse end markets including construction, renewable energy, and industrial manufacturing.

The electrical components industry is growing steadily, fueled by rising demand for efficient, safer infrastructure and the global shift toward electrification, driven by renewable energy, EV charging networks, data centers, and smart grids. As transmission and distribution systems undergo historic upgrades - needing nearly $25 trillion in investment by 2050 - demand is surging for specialized components that meet strict regulatory and technical standards.

At the same time, the industry faces growing complexity where companies must bring products to market faster and at lower costs while managing volatile input prices, global supply chains, and cybersecurity risks. With greater integration into digital networks and reliance on emerging markets, especially in Asia, and public contracts, the risks of corruption, labor issues, and cyber threats are rising.

Source: International Energy Agency’s World Energy Outlook 2022; IMF; BCG analysis.

nVent competes in a fragmented market alongside larger players like Eaton Corporation ($24.8B in 2024 revenue), Schneider Electric (€38B), Hubbell ($5.6B), and ABB ($32B). While Eaton leads in U.S. low-voltage equipment and Schneider dominates globally in medium-voltage, nVent focuses on specialized connection and protection solutions allowing it to maintain premium pricing where technical performance and compliance matter. The group also faces rising pressure from low-cost Asian manufacturers in commodity segments but benefits from strong brand and focus on engineered, regulation-heavy applications.

In 2024, the company reported a 12.6% increase in revenue, reaching $3 billion. However, this growth came with a sharp decline in profitability. Net income fell by 41.5% to $331 million, compared to $567 million in 2023, as the net margin contracted from 17.4% to 11%. Operating margin also declined slightly from 22% to 21.7%. EBITDA dropped by 9% to $700 million, reflecting both margin compression and rising costs. ROA decreased from 9.31% to 6.49%, signaling weaker efficiency in generating profit from assets. Looking ahead, analysts expect a recovery by 2027, with projected revenue of $4.1 billion, net income of $548 million, and EBITDA of $941 million. Margins are forecast to improve modestly, with a net margin of 13.3%, operating margin of 20.1%, EBITDA margin at 22.8% (vs. 23.4% in 2024), and free cash flow margin expected at 16.8%, down from 18.9% this year.

In 2024, Enclosures revenue grew by 13.6% to $1.82 billion from $1.6 billon in 2023, while Electrical & Fastening Solutions rose 11.3% to $1.18 billion from $1.06 billion. North America drove most of the growth, with Enclosures up 16.8% and Fastening Solutions up 13.8%. EMEA saw modest increases: Enclosures grew 4.7%, and Fastening Solutions rose 6.6%. In Asia-Pacific, Enclosures increased 10.1%, and Fastening Solutions jumped 11.9%. Revenue in the Rest of World segment remained nearly flat across both segments.

The Infrastructure segment led the increase, climbing 23.1% to $980.9 million, driven by a 36.5% jump in Enclosures and a 4.0% rise in Fastening Solutions. Industrial revenue grew 7.3% to $1.06 billion, with Enclosures up 4.9% and Fastening Solutions up 24.2%. Commercial & Residential rose 8.5% to $878.9 million, primarily from a 12.1% increase in Fastening Solutions, while Enclosures were flat. Energy posted the smallest gain, up 17.1% to $81.7 million, supported by moderate increases in both segments.

In terms of valuation, the company is trading well above its historical averages. Its current P/E ratio stands at 34.6x, compared to a six-year average of 21.5x, with forward estimates of 27.6x in 2025, 24.4x in 2026, and 21.4x in 2027. The price-to-book ratio has also risen slightly to 3.54x, up from 3.16x in 2023 and above the seven-year average of 2.4x. The EV/EBITDA multiple is elevated as well, currently at 18.8x versus a historical average of 13.5x. Earnings per share declined by 41% year-over-year to $1.97 in 2024 but are expected to rebound to $2.55 in 2025 and $3.20 by 2028. The dividend remained stable at $0.70 from 2019 to 2023 but increased to $0.76 in 2024. It is expected to continue rising, reaching $0.92 by 2027.

nVent posted a strong Q1 2025, with sales up 11% to $809 million and adjusted EPS rising 10% to $0.67, driven by solid execution and growing demand in power utilities and data centers. Free cash flow jumped 32% to $44 million, while backlog grew sequentially, giving the company clearer visibility into the rest of the year. The early closure of its Thermal Management divestiture and the acquisition of Avail Electrical Products sharpen nVent’s focus on high-growth infrastructure verticals, particularly power and data. With demand accelerating in data solutions and grid upgrades, and a tighter focus on new products and high-growth sectors, nVent seems to evolve into a more agile, growth-oriented electrical player.

nVent Electric benefits from a strong exposure to long-term electrification and digitalization trends, thanks to established brand recognition and portfolio optimization efforts improving profitability. However, the group is tied to cyclical exposure to construction and industrial markets, competitive pressures from larger and lower-cost competitors, and commodity price volatility affecting input costs. It also must face its smaller scale relative to major competitors may limit its ability to invest in new technologies or compete aggressively on pricing.

Grégoire Legrand