NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.7%. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. 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.
- 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.
- The gross profit margin for ABB LTD is currently lower than what is desirable, coming in at 33.70%. Regardless of ABB's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.20% trails the industry average.
- ABB has underperformed the S&P 500 Index, declining 16.15% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
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 16.3, above the average industrial industry P/E ratio of 13.7 and below the S&P 500 P/E ratio of 17.7. ABB has a market cap of $41.4 billion and is part of the
industry. Shares are down 19.6% year to date as of the close of trading on Thursday.
You can view the full
or get investment ideas from our