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"We rate ABB LTD (ABB) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electrical Equipment industry average. The net income increased by 29.5% when compared to the same quarter one year prior, rising from $525.00 million to $680.00 million.
- The current debt-to-equity ratio, 0.47, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electrical Equipment industry and the overall market on the basis of return on equity, ABB LTD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- ABB LTD has improved earnings per share by 20.8% 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 $1.12 versus $1.22 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $1.12).You can view the full analysis from the report here: ABB Ratings Report