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Forgent Stock Up 30% Since Strong Q4: Buy for More Upside?
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Key Takeaways
FPS shares are up 29.5% since Q4 results, and Wall Street's average price target signals further 45% upside.
FPS' record $3B backlog, up 256% y/y, covers over 90% of fiscal 2027 revenue guidance of $2.4B-$2.6B.
Forgent expects fiscal 2027 EPS growth of 95%, backed by AI demand, margin gains and stronger cash flow.
Forgent Power Solutions (FPS - Free Report) has surged 29.5% since its strong fiscal fourth-quarter 2026 results on Sept. 15. After such a run, is there still upside, or has the easy money been made? The AI-linked power equipment maker, which went public in February 2026, beat estimates and logged a 94% increase in its fourth-quarter revenues. For investors who missed the move, the question is simple— is it too late to buy? Or does the stock have enough catalysts to fuel further gains?
Forgent Power Solutions, Inc. Price, Consensus and EPS Surprise
The strongest argument for more upside starts with orders already in hand. Forgent ended fiscal 2026 with a record $3 billion backlog, up 256% year over year and more than twice its fiscal 2026 revenues. The backlog covers more than 90% of its fiscal 2027 revenue guidance of $2.4-$2.6 billion, which implies 76% growth at the midpoint. With most of next year’s sales already under firm orders, near-term demand risk is much lower. Converting that backlog into revenues still depends on production schedules and execution.
Forgent is not the only one seeing this. AI-driven data-center buildouts and grid electrification are creating a durable, multi-year demand cycle across electrical equipment. nVent Electric’s (NVT - Free Report) second-quarter 2026 backlog remained steady at $2.5 billion, which gives it visibility through 2026 and into 2027. Eaton Corp’s (ETN - Free Report) electrical backlog at the end of the second quarter of 2026 was 43% above the level a year earlier.
Even then, Forgent Power’s 256% jump stands out against its peers. That said, converting that backlog into revenues still depends on production schedules and execution.
Demand and Share Gains Drive Growth
That backlog is being fed by strong AI data-center demand and share gains. Forgent makes electrical equipment for hyperscalers and AI labs. Its data-center revenues grew 161% in fiscal 2026, against estimated market growth of 37%.
It has also won its first direct order from a frontier AI lab and signed a master services agreement with a hyperscaler, relationships that could lead to larger projects.
Its Powertrain Solutions business is well placed for the shift toward prefabricated, factory-built power systems, which speed up construction. By selling integrated systems rather than individual components, Forgent captures more spending per customer. The segment’s revenues rose 187% to $147 million in the last reported quarter and made up about 40% of the year-end backlog.
Forgent is outgrowing its end markets. Grid revenues rose 69% in fiscal 2026 against estimated market growth of 10%, while industrial and other revenues grew 11% against 8%. Vertical integration, customization and short lead times support its competitiveness. If share gains continue, growth can hold up even if industry demand cools.
Margins and Cash Flow Back the Expansion
Strong growth is more valuable when profitability rises with it, which is happening with Forgent. Fiscal 2026 adjusted EBITDA rose 91% to $323 million, lifting the margin to 22.7%. As existing plants run at higher volumes, revenues can grow faster than operating costs. Fiscal 2027 guidance points to further gains, with adjusted EBITDA expected at $575-$625 million, up 86% at the midpoint, and adjusted EPS of $1.26-$1.40, up 95% at the midpoint.
Cash generation and capacity expansion should support the next phase. Operating cash flow rose to $109 million in fiscal 2026 from $45 million a year earlier, and management expects more than $300 million in fiscal 2027. A planned Powertrain Solutions facility in Tijuana should lift total revenue capacity to about $5.8 billion. Stronger cash flow would let Forgent fund that expansion and possible acquisitions, with less reliance on outside financing.
Valuation Check
Forgent is currently trading at a forward 12-month P/E multiple of 24.43. While that is slightly higher than the industry, it is still lower than Eaton’s 27.51X and nVent’s 26.6X.
Image Source: Zacks Investment Research
For a company guiding to roughly 95% EPS growth in fiscal 2027, a small premium to the industry is easy to justify, and a discount to peers like nVent and Eaton makes the valuation look reasonable.
Strong tailwinds from AI data-center spending and grid electrification add to the case, and Forgent’s record backlog positions it well to capture that demand. If Forgent converts its backlog as planned, the current multiple leaves room for further upside.
Risks Exist, but the Case is Still Strong
After a strong rally, expectations are high. Yesterday, the stock pared some gains, falling 7% as JPMorgan Chase trimmed its price target but maintained its Overweight rating. Investors should not panic over the dip. If anything, it could be a buying opportunity.
Forgent’s fundamentals have moved faster than the share price. A $3 billion backlog, triple-digit data-center growth, market-share gains, expanding margins and upbeat EPS guidance suggest the stock is backed by real earnings power, not just momentum.
For investors who missed the initial move, it is not too late. Forgent still looks like a buy for more upside. Wall Street’s average price target implies a 50% upside from current levels.
View the Zacks #1 Rank List
Image: Bigstock
Forgent Stock Up 30% Since Strong Q4: Buy for More Upside?
Key Takeaways
Forgent Power Solutions (FPS - Free Report) has surged 29.5% since its strong fiscal fourth-quarter 2026 results on Sept. 15. After such a run, is there still upside, or has the easy money been made? The AI-linked power equipment maker, which went public in February 2026, beat estimates and logged a 94% increase in its fourth-quarter revenues. For investors who missed the move, the question is simple— is it too late to buy? Or does the stock have enough catalysts to fuel further gains?
Forgent Power Solutions, Inc. Price, Consensus and EPS Surprise
Forgent Power Solutions, Inc. price-consensus-eps-surprise-chart | Forgent Power Solutions, Inc. Quote
Record Backlog Adds Visibility
The strongest argument for more upside starts with orders already in hand. Forgent ended fiscal 2026 with a record $3 billion backlog, up 256% year over year and more than twice its fiscal 2026 revenues. The backlog covers more than 90% of its fiscal 2027 revenue guidance of $2.4-$2.6 billion, which implies 76% growth at the midpoint. With most of next year’s sales already under firm orders, near-term demand risk is much lower. Converting that backlog into revenues still depends on production schedules and execution.
Forgent is not the only one seeing this. AI-driven data-center buildouts and grid electrification are creating a durable, multi-year demand cycle across electrical equipment. nVent Electric’s (NVT - Free Report) second-quarter 2026 backlog remained steady at $2.5 billion, which gives it visibility through 2026 and into 2027. Eaton Corp’s (ETN - Free Report) electrical backlog at the end of the second quarter of 2026 was 43% above the level a year earlier.
Even then, Forgent Power’s 256% jump stands out against its peers. That said, converting that backlog into revenues still depends on production schedules and execution.
Demand and Share Gains Drive Growth
That backlog is being fed by strong AI data-center demand and share gains. Forgent makes electrical equipment for hyperscalers and AI labs. Its data-center revenues grew 161% in fiscal 2026, against estimated market growth of 37%.
It has also won its first direct order from a frontier AI lab and signed a master services agreement with a hyperscaler, relationships that could lead to larger projects.
Its Powertrain Solutions business is well placed for the shift toward prefabricated, factory-built power systems, which speed up construction. By selling integrated systems rather than individual components, Forgent captures more spending per customer. The segment’s revenues rose 187% to $147 million in the last reported quarter and made up about 40% of the year-end backlog.
Forgent is outgrowing its end markets. Grid revenues rose 69% in fiscal 2026 against estimated market growth of 10%, while industrial and other revenues grew 11% against 8%. Vertical integration, customization and short lead times support its competitiveness. If share gains continue, growth can hold up even if industry demand cools.
Margins and Cash Flow Back the Expansion
Strong growth is more valuable when profitability rises with it, which is happening with Forgent. Fiscal 2026 adjusted EBITDA rose 91% to $323 million, lifting the margin to 22.7%. As existing plants run at higher volumes, revenues can grow faster than operating costs. Fiscal 2027 guidance points to further gains, with adjusted EBITDA expected at $575-$625 million, up 86% at the midpoint, and adjusted EPS of $1.26-$1.40, up 95% at the midpoint.
Cash generation and capacity expansion should support the next phase. Operating cash flow rose to $109 million in fiscal 2026 from $45 million a year earlier, and management expects more than $300 million in fiscal 2027. A planned Powertrain Solutions facility in Tijuana should lift total revenue capacity to about $5.8 billion. Stronger cash flow would let Forgent fund that expansion and possible acquisitions, with less reliance on outside financing.
Valuation Check
Forgent is currently trading at a forward 12-month P/E multiple of 24.43. While that is slightly higher than the industry, it is still lower than Eaton’s 27.51X and nVent’s 26.6X.
For a company guiding to roughly 95% EPS growth in fiscal 2027, a small premium to the industry is easy to justify, and a discount to peers like nVent and Eaton makes the valuation look reasonable.
Strong tailwinds from AI data-center spending and grid electrification add to the case, and Forgent’s record backlog positions it well to capture that demand. If Forgent converts its backlog as planned, the current multiple leaves room for further upside.
Risks Exist, but the Case is Still Strong
After a strong rally, expectations are high. Yesterday, the stock pared some gains, falling 7% as JPMorgan Chase trimmed its price target but maintained its Overweight rating. Investors should not panic over the dip. If anything, it could be a buying opportunity.
Forgent’s fundamentals have moved faster than the share price. A $3 billion backlog, triple-digit data-center growth, market-share gains, expanding margins and upbeat EPS guidance suggest the stock is backed by real earnings power, not just momentum.
For investors who missed the initial move, it is not too late. Forgent still looks like a buy for more upside. Wall Street’s average price target implies a 50% upside from current levels.
FPS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.