Is Forgent Power Solutions Stock Priced Right Against Its Peers

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Shares of Forgent Power Solutions (FPS) fell 37.5% between September 23 and October 22, 2026. Even after that decline, the stock trades at a higher multiple of its earnings than five of its peers, including Vertiv and Eaton. Forgent also grew its sales faster than all of them, but it retained the smallest share of those sales as operating profit. So are buyers paying for the growth and betting that the margin will follow?

Forgent Is Priced Like The Group's Fastest Grower

Yes, on these figures, you pay for Forgent's growth. The stock trades at 78.8 times earnings. Powell Industries, the peer closest to it in market value, trades at 28.8 times earnings. Over each company's latest four fiscal quarters, Forgent grew its revenue by 88.5%, while Powell recorded 7.0% growth.

On profitability, however, Forgent ranks last in the group. The company kept 12.6% of its revenue as operating profit, compared with 19.7% for Powell. All five peers are slower growing and cheaper than Forgent. The stock price therefore reflects Forgent's first-place growth, even as its margin sits in last place. This price appears to assume the company can keep growing while its margin catches up with its rivals'.

What Forgent Sells, And How Its Margin Has Moved

Forgent designs and makes electrical distribution equipment. Its fastest-growing line packages that equipment into larger, pre-assembled power systems. Management calls this line Powertrain Solutions. Revenue for the line grew 187% to $147 million in fiscal Q4 2026, and it rose from 13% of total revenue in fiscal 2025 to 25% in fiscal 2026. These larger orders can earn less. During a September 15, 2026 call, management said some of these systems include equipment bought from other manufacturers, which Forgent cannot mark up as much as its own.

Even so, Forgent has increased its operating margin in every quarter since fiscal Q2 2026, when that figure stood at 6.8%. The margin reached 10.4% in fiscal Q3 and hit 19.9% in fiscal Q4. In fiscal Q4, revenue rose 94.3% from a year earlier. Management credits higher volumes for the increase in its own adjusted EBITDA margin. That metric rose only about 4 percentage points over those two quarters, however, reaching 24.4% in fiscal Q4.

How Much Growth Has Forgent Promised For Fiscal 2027?

Management expects fiscal 2027 revenue of $2.4 billion to $2.6 billion, projecting 76% growth at the midpoint. The company also expects its adjusted EBITDA margin to reach about 24%, up from 22.7% on the same measure in fiscal 2026. This metric represents the company's own measure of profit before interest, taxes, depreciation and amortization. A $3 billion backlog sits behind that guidance, which management describes as entirely firm orders.

The near-term risk is cost. Forgent has been hiring staff ahead of a production ramp. On the September 15 call, management said it expected about $10 million of one-time costs in fiscal Q1 2027, the quarter that ended September 30. Management said the company will not fully absorb those expenses until output rises. A new Powertrain Solutions plant in Tijuana is due to open only in the fourth quarter of fiscal 2027.

At this price, buyers are asking Forgent to keep outgrowing its rivals while lifting its margin toward theirs. The company's quarterly operating margin has now risen two quarters in a row. Over four quarters, however, it still trails the whole group. Forgent's operating margin in its next quarterly report, for fiscal Q1 2027, is the number to watch.

Is Too Much Of Your Wealth Riding On One Stock?

Forgent Power Solutions is one stock among several rivals a holder could own instead. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Our partner advisory firm offers a free strategy review of ways to protect a concentrated position and unwind it with less tax.

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