VRT fundamentals are strong but stock is overvalued; wait for further decline before buying.

Vertiv's sales rose by 24% compared to the same quarter last year . Most importantly, the company announced free cash flow of 925 million, an increase of 234% compared to the same quarter last year .

The fiscal year has started so well that the company's management team is raising its expectations for what they believe they can achieve this year. Also, as a result of increased demand, they are increasing capital expenditures because they see increasing demand for their products, so they want to provide more to meet that growing demand.

But does all this make Vertiv stock a buying opportunity? Sales at Vertiv have flourished for many years now, starting in 2020 when sales reached $4 billion on a 12-month basis .

Sales have nearly doubled to more than 11.4 billion over the past 12 months.

Management expects good times to continue, as previously mentioned, while revising their estimates for annual revenue growth in the current fiscal year. They are also increasing their capital expenditure budget to provide more supplies to meet rising demand.

As for Vertief, the answer is yes and yes. The operating margin reached 19.8% over the past 12 months, an increase of approximately 50% compared to 2023 when the operating margin was less than 12%.

Therefore, sales growth leads to profitability growth and profit margins. This is strong evidence of the natural demand for the company's products and services. This is not what happens with Vertief.

The company's revenue growth is increasing, and at the same time, its profit margins are also increasing. This is a real sign of increased organic demand for the company's products and services.

And for Vertiv, this also applies . The return on invested capital is also improving to 24.2%, up from negative levels in 2020. So when measuring the valuation on a forward price-to-earnings basis, it seems reasonable.

It appears fairly valued at 26. This is roughly the average at which the stock has traded according to this valuation metric, looking back several years . It was higher at some times and lower at other times.

In fact, I evaluated this company about a month ago when its forward price-to-earnings ratio was much higher than it is today. It was in its thirties and I warned investors that it did not look like an attractive buying opportunity a month ago.

I hope that you watched that video and refrained from buying " Vertiv" because you can now get it at a much more attractive price. One month after I assessed the company and saw that it was overvalued, the stock fell by 18.5%.

To be more precise, I made that classification on August 24, 2026, classifying the company as a "retain". So, with the current sell-off and the market price at $239, I calculated a fair value of $182.

Therefore, I still see a decline of approximately 24% in Vertief's stock from here, despite it having fallen by about 18% during the previous month.

Therefore, I will reiterate this assessment that I do not see Vertief as a buying opportunity at these prices. I will wait for another decline of approximately 15 to 20% in the share price before I consider buying this stock at these levels.