A Fresh Look at ABB (SWX:ABBN) Valuation Following Its New UK Manufacturing and R&D Facility Launch

ABB (SWX:ABBN) is making headlines this week, having just launched a major new manufacturing and R&D facility in Nottingham, UK, focused on earthing and lightning protection solutions. The move comes as demand surges from industries like data centers, renewable energy providers, and critical infrastructure operators who want to guard against costly service interruptions from electrical surges. This new center not only brings cutting-edge research and production into one site but also highlights ABB’s commitment to sustainable solutions and innovation. Stepping back, this expansion fits neatly into a bigger story for ABB. Over the past year, the share price has climbed 17%, with momentum really building in the past three months, up nearly 19%. These gains reflect not only excitement around new facilities but also steady revenue and net income growth, as well as broader strategic investments in electrification. ABB’s long-term track record has also rewarded patient investors, returning nearly 147% over three years and more than 184% over five. But with the shares powering higher on news like today’s, is ABB now undervalued, or has the market already priced in its future growth and innovation?

Most Popular Narrative: 11% Overvalued

According to the most widely followed narrative, ABB is currently trading above its fair value and is considered overvalued based on consensus analyst expectations and discounted cash flow analysis.

ABB's robust order intake, especially in electrification, utility, and data center demand, reflects structural increases in global electricity consumption and grid upgrades as industries and urban infrastructure transition away from fossil fuels. This supports visible multi-year revenue growth and an expanding order backlog. The company's expansion of embedded intelligence and digital capabilities (as seen in the Emax 3 circuit breaker and broader ABB Ability™ platform) is driving higher-margin service and software revenues, as well as recurring income, supporting long-term margin and earnings improvement.

Ready to see what’s powering ABB’s elevated price? The key to this narrative is not only steady growth but also bold profit margin targets and ambitious assumptions for the years ahead that could reshape valuations across its industry. Want to know exactly how revenue, margins, and future share counts combine to produce this contested fair value? The main driver behind the overvaluation call might surprise you.

Result: Fair Value of $51.11 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in end-markets or intensifying competition, particularly from agile rivals in China, could limit ABB’s projected earnings growth and margin expansion.

Find out about the key risks to this ABB narrative.

Another View: The SWS DCF Model Perspective

Looking at ABB from our SWS DCF model, the shares also appear overvalued and this challenges any notion that the current price is a bargain. Does this model capture all the optimism about growth, or something more?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ABB for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ABB Narrative

You might see the story differently, and the opportunity to dig into the numbers yourself is just a few clicks away. Why not create your own perspective in under three minutes? Do it your way

A great starting point for your ABB research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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