ABB Ltd. ABB is well poised for growth courtesy of strength across its businesses, organic growth investments, acquired assets and a sound capital-deployment strategy.
Notably, the Zacks Rank #2 (Buy) company has a market capitalization of $62.5 billion. In the past three months, the stock has appreciated 4.3% compared with the industry’s growth of 3.3%.
Let’s delve into the factors that make investment in the company a smart choice at the moment.
Business Strength: ABB’s diversified business structure helps it mitigate the adverse impact of weakness in one end market with strength across others. For instance, the company anticipates end markets like food & beverage, machine builders, e-mobility, mining & metals, rail and residential buildings to witness growth, going forward. Also, end markets like distribution utilities, renewables and data centers are expected to show resilience.
Inorganic Moves: The company’s buyout of Codian Robotics B.V. (October 2020) is anticipated to expand the technological expertise and product portfolio of its Robotics & Discrete Automation segment. Also, its divestment of Power Grids business (in July 2020) is helping it focus more on its core businesses apart from significantly improving its financial flexibility.
Rewards to Shareholders: It is committed toward rewarding shareholders through share- repurchase programs and dividend payouts. In April 2020, the company paid out dividends worth $1,758 million to shareholders. In July 2020, it introduced a share repurchase program, through which it intends to repurchase its shares for 10% (or 180 million) of its outstanding shares.
Initiatives: The company is also poised to gain from its organic growth investments and diligent cost-cutting initiatives. In 2020, it successfully delivered annual run-rate cost reductions of $500 million from the implementation of the ABB Operating System. Also, certain cost-control measures implemented in response to the coronavirus crisis will likely be beneficial.
Estimate Revisions: In the past 30 days, the Zacks Consensus Estimate for its 2021 earnings has moved up from $1.23 to $1.24 on two upward estimate revisions. Further, the consensus estimate for its 2022 earnings has increased from $1.48 to $1.49 on one upward estimate revision.
Other Key Picks
Some other top-ranked stocks from the Zacks Industrial Products sector are AGCO Corporation AGCO, II-VI Incorporated IIVI and Regal Beloit Corporation RBC, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AGCO has a trailing four-quarter earnings surprise of 454.97%, on average.
II-VI has a trailing four-quarter earnings surprise of 83.68%, on average.
Regal Beloit has a trailing four-quarter earnings surprise of 31.56%, on average.
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