Is It Too Late To Consider Buying ABB Ltd (VTX:ABBN)?

April 25, 2022
  •  Updated
August 07, 2022
SWX:ABBN
Source: Shutterstock

Let's talk about the popular ABB Ltd (VTX:ABBN). The company's shares received a lot of attention from a substantial price movement on the SWX over the last few months, increasing to CHF34.39 at one point, and dropping to the lows of CHF28.74. 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 CHF30.46 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.

Check out our latest analysis for ABB

What is ABB worth?

Good news, investors! ABB is still a bargain right now. My valuation model shows that the intrinsic value for the stock is CHF45.40, but it is currently trading at CHF30.46 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, ABB’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of ABB look like?

earnings-and-revenue-growth
SWX:ABBN Earnings and Revenue Growth April 25th 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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. 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? Although ABBN is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to ABBN, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on ABBN for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. When we did our research, we found 2 warning signs for ABB (1 is potentially serious!) that we believe deserve your full attention.

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.

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