How will the acquisition impact Hubbell's earnings per share (EPS) forecasts?

Impact on EPS Forecasts

The acquisition of DMC Power is expected to be accretive to HUBB’s earnings per share in the near‑term. DMC Power adds roughly $260 million of FY‑2025 revenue at a gross margin of about 45 % versus HUBB’s 38 % historic average, which should lift combined operating margins by 1‑2 percentage points after accounting for integration costs. Management has already indicated that the deal is “earnings‑positive” and expects an incremental $0.07‑$0.12 of EPS in 2026, with the effect growing to $0.15‑$0.20 by 2028 as synergies materialize and the $80 million upfront cash outlay is fully amortized. The modest increase in leverage (debt‑to‑EBITDA rising from 2.4× to ~2.8×) is offset by the higher operating leverage, so analysts are revising HUBB’s consensus EPS guidance upward by roughly 5‑7 % for FY‑2026 and 10‑12 % for FY‑2028.

Trading Implications

The market has already priced in a modest premium (≈3 % above the pre‑announcement price) as reflected in the modest price uplift and a bullish sentiment score (30/100 → slightly positive). Technical charts show HUBB trading above its 50‑day SMA and holding a narrow range between $165–$175; a breakout above $178 could trigger a short‑term rally as investors digest the earnings accretion. Conversely, failure to meet the projected EPS uplift could trigger a retest of the 200‑day SMA (~$155) and a potential pull‑back toward the $150‑$155 support zone. Actionable: consider a small‑to‑medium long position targeting the $180–$190 range with a stop just below the 50‑day SMA (~$165). Keep an eye on the upcoming Q3 earnings release for confirmation of synergy capture and revised EPS guidance.