Legrand (ENXTPA:LR) Stock Can Data Center Growth Sustain Margin Strength

Legrand walked into this earnings day with a tired chart and a rich story. The stock closed at €130.3, with the past month down about 11% and the last quarter down about 14%. Yet the latest numbers tell a different tale. Second quarter revenue reached €2,862.7m and basic earnings per share came in at €1.39. The real headline is that the margin engine is still working. Net profit over the last twelve months stands at €1.31b on €10.11b of revenue, keeping profitability close to recent levels despite the recent share price slide.

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Q2 2026 Earnings Summary

• Revenue, Q2 2026 vs. Q2 2025: €2,862.7m vs. €2,496.5m (up about 14.7%)
• Net Income, Q2 2026 vs. Q2 2025: €363.3m vs. €334.8m (up about 8.5%)
• Basic EPS, Q2 2026 vs. Q2 2025: €1.39 vs. €1.28 (up about 8.6%)
• Net Profit Margin, Trailing 12 Months to Q2 2026 vs. Trailing 12 Months to Q2 2025: 13.0% vs. 13.2% (slight margin compression)

Prefer clean visuals instead of another wall of earnings tables and raw figures? See how Legrand’s valuation compares at a glance in the full visual breakdown in our company report for Legrand.

Legrand’s Bull Story Meets Hard Data Center Numbers

The bullish pitch on Legrand is simple. Data centers and energy transition products are expected to power faster growth while pricing power keeps margins high. The latest half year does a lot to back that up. Data center revenue grew more than 30% organically in H1 and now accounts for about 32% of group sales. Management is guiding to about 25% to 30% organic data center growth for 2026. That is exactly the kind of sustained momentum this narrative needs.

On margins, Legrand held an adjusted operating margin of 20.8% in H1 and kept full year guidance at 20.5% to 21%. That supports the claim of margin durability even as acquisitions dilute gross margin and purchase price inflation runs slightly above 4%. Strong free cash flow at 9% of sales and a raised sales growth target to 16% to 19% excluding currency effects also line up with the idea of a high quality growth engine rather than a one off spike.

Compare this picture of pricing power, cash generation and guidance with what the Street is signaling. See the consensus price target analysis for Legrand to check whether analyst targets are keeping pace with Legrand’s latest earnings story.

Legrand Bear Case: Concentration Fears Partly Vindicated

Bears argue Legrand is over dependent on data centers, with weaker building markets and any slowdown in hyperscaler spending posing real risk. The latest numbers support that concentration worry more than management rhetoric suggests. Data centers now sit at about 32% of group revenue and grew at more than 30% organically in H1, while Europe declined about 2.4% and Rest of World only inched ahead. That mix means group growth leans heavily on one engine.

Margin and cash performance do not yet back the harsher bear claim of imminent profit erosion. The adjusted operating margin is 20.8% and free cash flow is 9% of sales, with guidance for margins unchanged. However, gross margin was diluted by acquisitions and working capital is elevated at 14% of sales. Execution risk and sensitivity to any cooling in data center orders therefore remain very much live issues for Legrand.

After such heavy reliance on data center growth and rising working capital needs, you may want to review our risk analysis for Legrand which shows 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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