Stock Analysis

At CHF28.41, Is ABB Ltd (VTX:ABBN) Worth Looking At Closely?

  •  Updated
SWX:ABBN
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Let's talk about the popular ABB Ltd (VTX:ABBN). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the SWX. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine ABB’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for ABB

What's The Opportunity In ABB?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 18% below my intrinsic value, which means if you buy ABB today, you’d be paying a fair price for it. And if you believe the company’s true value is CHF34.81, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because ABB’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of ABB look like?

earnings-and-revenue-growth
SWX:ABBN Earnings and Revenue Growth August 7th 2022

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. Though in the case of ABB, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? ABBN seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ABBN for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on ABBN should the price fluctuate below its true value.

If you want to dive deeper into ABB, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with ABB, and understanding these should be part of your investment process.

If you are no longer interested in ABB, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether ABB is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About SWX:ABBN

ABB

ABB Ltd engages in manufacture and sale of electrification, automation, robotics, and motion products for customers in utilities, industry and transport, and infrastructure in Switzerland and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth3
Past Performance5
Financial Health5
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Solid track record with excellent balance sheet and pays a dividend.