Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
ABB Ltd (VTX:ABBN) saw significant share price movement during recent months on the SWX, rising to highs of CHF20.56 and falling to the lows of CHF18.18. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether ABB’s current trading price of CHF19.18 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ABB’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in ABB?According to my valuation model, ABB seems to be fairly priced at around 15% below my intrinsic value, which means if you buy ABB today, you’d be paying a fair price for it. And if you believe that the stock is really worth CHF22.46, then there’s not much of an upside to gain from mispricing. In addition to this, ABB has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will ABB generate?Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. ABB’s earnings over the next few years are expected to increase by 44%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? ABBN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on ABBN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on ABB. You can find everything you need to know about ABB in the latest infographic research report. If you are no longer interested in ABB, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.