Rating Change #2
ABB Ltd (ABB) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- ABB's revenue growth has slightly outpaced the industry average of 26.4%. Since the same quarter one year prior, revenues rose by 27.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Electrical Equipment industry average. The net income increased by 43.3% when compared to the same quarter one year prior, rising from $623.00 million to $893.00 million.
- Net operating cash flow has increased to $961.00 million or 48.07% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 37.40%.
- ABB's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
- ABB LTD has improved earnings per share by 44.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ABB LTD reported lower earnings of $1.11 versus $1.26 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $1.11).
ABB Ltd. provides power and automation technologies for utility and industrial customers worldwide. The company's Power Products division manufactures and sells high- and medium-voltage switchgear and apparatus, circuit breakers, power and distribution transformers, and sensors. The company has a P/E ratio of 17.7, above the average industrial industry P/E ratio of 14.9 and equal to the S&P 500 P/E ratio of 17.7. ABB has a market cap of $45 billion and is part of the industrial goods sector and industrial industry. Shares are down 12.6% year to date as of the close of trading on Wednesday.You can view the full ABB Ratings Report or get investment ideas from our investment research center.
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