Here's Why Hold Strategy is Apt for ABB Stock Right Now
ABB Ltd ABB is backed by multiple tailwinds despite cost inflation in commodities, freight and labor. While supply-chain disruptions (primarily due to a shortage of semiconductors) are affecting ABB’s bottom line, pricing actions are providing significant relief to the company.
The company’s Electrification segment is benefiting from higher orders owing to strong customer activity. Strong underlying market demand and improved supply chains are contributing to growth in the Motion segment. The acquisitions of PowerTech Converter and Siemens' low-voltage NEMA motor business are expected to aid the segment’s performance.
The Process Automation segment is driven by strength in the gas, mining and refining end market. High levels of customer activity are supporting the Robotics & Discrete Automation segment.
The company’s acquisition of a majority stake in InCharge Energy (January 2022) boosts its E-mobility business by expanding its customer base and boosting its fleet electrification software and digital services offering in North America. Also, the October 2020 buyout of Codian Robotics B.V. has expanded the technological expertise and product portfolio of ABB’s Robotics & Discrete Automation segment.
ABB utilizes its cash flow to reward its shareholders through dividend payouts and share-repurchase programs. In the first nine months of 2022, it paid out dividends worth $1,698 million. In April 2022, ABB launched a $3-billion share repurchase program to run through its 2023 annual general meeting. ABB has purchased 50 million shares for approximately $1.5 billion under this program. The company purchased 90 million shares for $3.1 billion under the previous program which was completed in March 2022. Such diligent capital deployment strategies boost shareholders' wealth.
In light of the above-mentioned positives, we believe that investors should retain ABB stock for now, as suggested by its current Zacks Rank #3 (Hold).
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In the past six months, the stock has risen 14%.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
MRC Global Inc. MRC presently sports a Zacks Rank #1 (Strong Buy). MRC’s earnings surprise in the last four quarters was 103%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, MRC Global’s earnings estimates have increased 16.2% for 2022. The stock has rallied 19.9% in the past six months.
IDEX Corporation IEX presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 0.6% for 2022. The stock has rallied 27% in the past six months.
EnerSys ENS delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 in the past 60 days. The stock has gained 27% in the past six months.
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ABB Ltd (ABB) : Free Stock Analysis Report
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Enersys (ENS) : Free Stock Analysis Report
