Earnings Beat: ABB Ltd Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

It's been a good week for ABB Ltd (VTX:ABBN) shareholders, because the company has just released its latest quarterly results, and the shares gained 5.8% to CHF44.64. Results look mixed - while revenue fell marginally short of analyst estimates at US$7.9b, statutory earnings beat expectations 7.1%, with ABB reporting profits of US$0.49 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for ABB

Following the latest results, ABB's 22 analysts are now forecasting revenues of US$33.5b in 2024. This would be a satisfactory 3.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 6.7% to US$2.10. In the lead-up to this report, the analysts had been modelling revenues of US$33.6b and earnings per share (EPS) of US$2.02 in 2024. So the consensus seems to have become somewhat more optimistic on ABB's earnings potential following these results.

The consensus price target was unchanged at CHF40.80, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values ABB at CHF50.94 per share, while the most bearish prices it at CHF34.19. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ABB shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting ABB's growth to accelerate, with the forecast 5.0% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that ABB is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards ABB following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on ABB. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for ABB going out to 2026, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for ABB that you should be aware of.

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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.