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ABB Closes Share Buyback Program, to Start Another in April

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ABB Ltd. yesterday announced the completion of the share repurchase program, which was introduced in April 2021. Under this program, the company repurchased 90,066,100 shares for roughly $3.1 billion over the past year. It’s worth noting that since July 2020, ABB repurchased 218,686,689 shares for a total value of about $6.6 billion under its previous buyback programs.

The company’s repurchase activities have been in sync with its strategy of rewarding shareholders with cash proceeds of $7.8 billion from the sale of its Power Grids business (divested in July 2020). The company plans to return the remaining $1.2 billion of the cash proceeds with the launch of a new share repurchase program.

In sync with this plan, ABB’s board of directors declared a new share repurchase program, which will be introduced next month. This buyback program, which is expected to remain operational till the company’s 2023 Annual General Meeting (AGM), will be for an aggregate amount of up to $3 billion. It’s worth noting that under this latest repurchase program, the shares will be traded on a second line on the SIX Swiss Exchange.

As communicated by the company, its shareholders have also given the approval for canceling 88,403,189 shares bought under its previous share repurchase programs. Further, per its employee share plans, ABB aims to buy a maximum of 15 million shares till the 2023 AGM.

Sound Capital Allocation Strategies

ABB follows sound capital-allocation strategies, aiming to improve values for shareholders. The company acquires lucrative businesses, buys back shares and provides dividends to shareholders.

In 2021, it paid out dividends worth $1,726 million to shareholders and purchased treasury stock worth $3,708 million.

Zacks Rank, Price Performance and Estimate Trend

ABB, with a $67.8-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company stands to benefit from its state-of-the-art digital offering — ABB Ability — technological expertise and strong market presence in the long run. Moreover, organic growth investments and focus on cost-control measures are likely to improve its competency over time. However, challenges related to supply chain, logistics and higher labor costs remain concerning.

In the past three months, the stock has lost 9.1% compared with the industry’s decline of 6.9%.

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In the past 30 days, the Zacks Consensus Estimate for earnings has been lowered 2.1% to $1.43 for 2022 and 1.2% to $1.71 for 2023.

Key Picks

Some better-ranked stocks from the same space are discussed below.

Franklin Electric Co., Inc. (FELE - Free Report) presently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise in the last four quarters was 17.4%, on average.

In the past 30 days, Franklin Electric’s earnings estimates have been stable for 2022. FELE’s shares have lost 10.5% in the past three months.

Zurn Water Solutions Corporation (ZWS - Free Report) presently sports a Zacks Rank #1.  Its earnings surprise in the last four quarters was 62.43%, on average.

In the past 30 days, Zurn’s earnings estimates have been unchanged for 2022. ZWS’s shares have lost 2.5% in the past three months.

Regal Rexnord Corporation (RRX - Free Report) presently carries a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 7.39%, on average.

Its earnings estimates have been stable for 2022 in the past 30 days. RRX’s shares have lost 8.5% in the past three months.


See More Zacks Research for These Tickers


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Franklin Electric Co., Inc. (FELE) - free report >>

Regal Rexnord Corporation (RRX) - free report >>

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