Message Font: Serif | Sans-Serif
No. of Recommendations: 5
The Swedish-Swiss company formerly known as ASEA Brown Boveri.
Main listing in Zurich, but also trades in the US as ABB. Liquid.

ABB Ltd provides power and automation technologies for utility and
industrial customers. The company provides a range of products,
systems, solutions and services that are designed to improve power grid
reliability, increase industrial productivity and enhance energy efficiency.
Its focus on power transmission, distribution and power-plant
automation serves electric, gas and water utilities, as well as
industrial and commercial customers. It also deliver automation
systems that measure, control, protect and optimize plant applications
across a full range of industries. ABB operates in approximately 100
countries and has structured its global organization into four regions:
Europe, the Americas, Asia and the Middle East and Africa (MEA).
It is headquartered in Zurich, Switzerland. Has about 17700 employees.

Trading at around 11.7 times last year's earnings.
ROE for 2009 through 2011 was 20.9% 17.1% 20.0%, very nice numbers indeed.
For comparison GE managed 9.7% 10.6% 12.8% and hasn't cracked 20% since 2002.
Share count essentially flat in recent years.
Sales grew 30% in the four years 2007-2011, which is 6.7%/year growth rate.
Dividends have risen a fair bit in that period, though a big part
of that is through increased payout ratio (now 50%) rather than profit growth.
Yield is 4.16% on current price of $16.64. 52 week range $15.26 - $26.61.
Price is about where it was 5.5 years ago, lowest since then except
for the few months in the worst of the crunch.
TTM earnings are a little under 3 times as high as they were then.

Does anyone have any insights on these guys?

Print the post Back To Top
No. of Recommendations: 0
Sorry, no insights; but I bought at $19 - $19.50 and I am not sweating yet. Even counting for a dividend "cut" (unpredictability) that European companies do often, I think they have fallen too far.

I had posted earlier (in hindsight, I jumped in too early) on April 25 -
Print the post Back To Top
No. of Recommendations: 0
I had been wondering why you liked Siemens more than ABB, and for that matter why BNY Mellon over State Street. No special insights though. The previous management got into a lot of trouble buying an insurance subsidiary, asbestos and whatnot. I was lucky enough to buy a few shares after they got kicked out and the company refocused on energy efficiency.
Since there is lots of energy inefficency around they seem to have no shortage of work.
Print the post Back To Top
No. of Recommendations: 0
I had been wondering why you liked Siemens more than ABB...

Simple explanations:
(1) I don't know either all that well
(2) Siemens might be superficially cheaper and more likely to have a big valuation rebound.

Print the post Back To Top
No. of Recommendations: 6
No particular insight, other than it's hard to have economic growth without a functioning electrical grid, and industrial robots never ask for a raise!

ABB's top line has suffered from negative price pressures and a less than optimal business/service mix. ROIC is down largely due to the Baldor acquisition ($4B), but I'd hope to see it around 20% soon. They've apparently made about $5B in improvements to efficiency in the last year or two.

It seems likely to be a slow year or two, especially if China hits a wall, but they've got something like a $25B order backlog. They're making modest increases in R&D spending, and doing more research ICFC (in country, for country). India and China still have work to do building out their power infrastructure, and not just anybody can build you an 1100 kV transformer.

Dividends have been raised throughout the business cycle, but mostly by increasing the payout ratio (currently around 50%). Debt looks OK in terms of maturities. The pension fund is slightly underfunded on retiree longevity and low bond yields, but nothing to worry about yet.

Despite all the "smart grid" hoopla, I'm guessing it's likely to be a slow grower, in the high single digits (analysts estimate around 11%). In five years, I'd guess earnings come in somewhere in the $2 - 2.15 range. That might give you annualized returns closer to 10% than 20% , but the dividend juices things a bit, and depending how cheap it gets in the meantime, YMMV.
Print the post Back To Top
No. of Recommendations: 0
Thanks all!
Still lots of reading to do.

Print the post Back To Top