Shares of Hammond Power Solutions vaulted 10.2% to $192.78 Monday after the Canadian transformer maker announced a long-term lease for a new manufacturing facility in Fort Worth, Texas — a direct play on one of the most acute bottlenecks in the American economy: the chronic shortage of electrical transformers that is stalling data centers and grid upgrades nationwide.
The Transformer Shortage Is Real, and HPS Is Racing to Fill It. AI hyperscalers plan more than $750 billion in data center capital spending in 2026, but 30–50% of sites risk delay or cancellation due to transformer shortages and switchgear backlogs.
Lead times for high-capacity transformers have stretched to as long as four years. HPS, already the largest manufacturer of dry-type transformers in North America , is positioning itself to absorb that pent-up demand rather than watch it sit in limbo.
The Numbers Behind the Facility. HPS signed a long-term lease for the Fort Worth site, which will expand its ability to serve U.S.-based customers requiring large standard and custom-engineered transformers. Initial capacity: CAD $250 million in annual output, with the site potentially supporting total annual manufacturing capacity of approximately CAD $400 million after further investment. HPS expects to invest about $50 million to equip and commission the initial production phase , with production expected to start in stages beginning Q4 2027. For a company that posted record annual sales of $898.3 million in 2025, up 13.9% from 2024 , that initial $250 million represents roughly a 28% revenue boost at full run-rate — substantial by any measure.
A Backlog Bigger Than the Factory. HPS's backlog at year-end 2025 increased 122% year over year and 74% sequentially , meaning orders are piling up faster than the company can build. The Fort Worth plant directly addresses this conversion gap. But investors should note the timeline: no revenue flows until late 2027, and gross margins already compressed to 30.3% due to unabsorbed costs at a new factory, higher material costs, and tariffs. Scaling a second greenfield site carries similar margin risk.
Valuation Already Prices In Optimism. At $192.78, HPS trades at roughly ~49× trailing earnings — with a P/E ratio of 49.25 and trailing EPS of $5.18. The stock is no longer cheap for an industrial manufacturer; it reflects a bet that the transformer supercycle will persist. If data center build-outs slow or tariffs bite harder, that premium leaves little room for error.