Conservative · Stocks to Consider and Updates

ABB Third Quarter Results Shy of Street’s Expectations

Net profit for the quarter at Swiss engineering firm ABB, Ltd. (NYSE: ABB – $19.81) was $603 million, up from $571 million a year earlier. Revenue climbed 6% to $9.26 billion from $8.72 billion. Analysts, however, expected a profit of $602 million on sales of $9.24 billion and adjusted earnings per share were three cents short of consensus at $0.34. In addition, total orders of $8.94 billion are 3% below Street views and the company’s operating margin of 12.1% is 30 basis points below analyst estimates. ABB said the acquisition of GE Industrial Solutions boosted reported orders by 4%, while adverse currency swings knocked about 3% off total orders. Management added that macroeconomic signs remain robust in Europe and the U.S., with growth expected to continue in China. ABB’s total order backlog stands at $23.5 billion, which may not be enough to meet consensus revenue estimates of $39.2 billion for the year.

       The shares are trading at a 52-week low as investors are losing patience with ABB’s restructuring plans and lackluster growth. Recently, there has been some noise about the company’s possible divestiture of its power grid business, although nothing is in the works. The electrification and robotics company has been on the decline along with many large industrial names of late. Nonetheless, investors with a long-term horizon may want to take another look as appreciation potential to the 2021-2023 stretch looks promising. And the 4.05% dividend yield is well-above the market average.

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