HUBBELL INC (NYSE:HUBB) – A Quality Stock Worth Considering

HUBBELL INC (NYSE:HUBB) stands out as a strong candidate for quality investors, according to our Caviar Cruise screening methodology. The company, which designs and manufactures electrical and electronic products, demonstrates consistent growth, high profitability, and solid financial health. Below, we examine why HUBB fits the criteria for a quality investment.

Key Strengths of HUBB

• Strong Revenue and EBIT Growth: Over the past five years, HUBB has achieved a revenue growth rate of 5.3% and an EBIT growth rate of 14.7%. This indicates not only expanding sales but also improving operational efficiency.
• High Return on Invested Capital (ROIC): With an ROIC of 61.8%, HUBB generates substantial returns on its capital investments, far exceeding the 15% threshold set by the Caviar Cruise screen.
• Healthy Debt Management: The company’s debt-to-free cash flow ratio of 2.4 suggests it can repay its obligations in just over two years using current cash flows, reflecting financial stability.
• Profit Quality: HUBB’s five-year average profit quality of 111.5% means it converts net income into free cash flow efficiently, a sign of strong earnings reliability.

Fundamental Analysis Highlights

Our fundamental report gives HUBB a score of 7 out of 10, with notable strengths in profitability and financial health. Key takeaways include:

• Profitability: HUBB outperforms most peers in margins, with a 19.9% operating margin and 14.3% net profit margin.
• Dividend Reliability: The company has raised dividends for at least 10 years, with a sustainable payout ratio of 34.1%.
• Valuation: While not cheap, HUBB trades at a reasonable valuation relative to industry peers, with a forward P/E of 21.5.

Why Quality Investors Should Take Note

HUBB’s ability to grow revenue and profits while maintaining high capital efficiency makes it a compelling choice for long-term investors. Its strong balance sheet and consistent dividend growth further reinforce its appeal.

For more quality stock ideas, explore our Caviar Cruise screener.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own research before making investment decisions.