We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Steer Clear of the ABB Stock for Now
Read MoreHide Full Article
ABB Ltd has been grappling with persistent supply-chain constraints, raw material cost inflation and foreign-currency headwinds.
Supply chain disruptions, primarily semiconductor shortages, are weighing on ABB’s volumes. The impact is especially grave in the Robotics & Discrete Automation segment. Revenues in the segment declined 13% year over year in the first half of 2022. Lockdowns in China are also hurting the company’s volumes.
Cost inflation in commodities, freight and labor is hurting ABB’s bottom line, which declined 47% year over year in the second quarter of 2022. While capital expenditures are expected to drive the company’s growth over the long term, it might hurt profitability over the short term. In the second quarter, the company incurred capital expenditures of $151 million. For the third quarter, ABB expects capital expenditures to increase further to $200 million. For 2022, it expects to incur capital expenditures of $750 million.
Given ABB’s vast international presence, the company is exposed to currency translation risks. Even hedging activities might not be able to protect it from unfavorable fluctuations. A stronger U.S. dollar is affecting the company’s top line. Adverse foreign-currency movements had an impact of 7% each on reported orders and revenues in the second quarter.
Due to these headwinds, shares of ABB have declined 21.3% in the year-to-date period, compared with the industry’s decrease of 11.9%.
Image Source: Zacks Investment Research
The pessimism surrounding the stock is evident from the Zacks Consensus Estimate for 2022 earnings being revised downward by 4.8% in the past 60 days.
In light of these negatives, we believe investors should avoid the ABB stock for now, as is suggested by its Zacks Rank #4 (Sell).
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Lindsay Corporation has an estimated earnings growth rate of 44.1% for the current year. Shares of the company have rallied 24% in the past six months.
Greif, Inc. (GEF - Free Report) presently carries a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average.
Greif has an estimated earnings growth rate of 36.8% for the current year. Shares of the company have gained 19.3% in the past six months.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Here's Why You Should Steer Clear of the ABB Stock for Now
ABB Ltd has been grappling with persistent supply-chain constraints, raw material cost inflation and foreign-currency headwinds.
Supply chain disruptions, primarily semiconductor shortages, are weighing on ABB’s volumes. The impact is especially grave in the Robotics & Discrete Automation segment. Revenues in the segment declined 13% year over year in the first half of 2022. Lockdowns in China are also hurting the company’s volumes.
Cost inflation in commodities, freight and labor is hurting ABB’s bottom line, which declined 47% year over year in the second quarter of 2022. While capital expenditures are expected to drive the company’s growth over the long term, it might hurt profitability over the short term. In the second quarter, the company incurred capital expenditures of $151 million. For the third quarter, ABB expects capital expenditures to increase further to $200 million. For 2022, it expects to incur capital expenditures of $750 million.
Given ABB’s vast international presence, the company is exposed to currency translation risks. Even hedging activities might not be able to protect it from unfavorable fluctuations. A stronger U.S. dollar is affecting the company’s top line. Adverse foreign-currency movements had an impact of 7% each on reported orders and revenues in the second quarter.
Due to these headwinds, shares of ABB have declined 21.3% in the year-to-date period, compared with the industry’s decrease of 11.9%.
Image Source: Zacks Investment Research
The pessimism surrounding the stock is evident from the Zacks Consensus Estimate for 2022 earnings being revised downward by 4.8% in the past 60 days.
In light of these negatives, we believe investors should avoid the ABB stock for now, as is suggested by its Zacks Rank #4 (Sell).
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Lindsay Corporation (LNN - Free Report) sports a Zacks Rank #1 (Strong Buy). LNN pulled a trailing four-quarter earnings surprise of 25.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Lindsay Corporation has an estimated earnings growth rate of 44.1% for the current year. Shares of the company have rallied 24% in the past six months.
Greif, Inc. (GEF - Free Report) presently carries a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average.
Greif has an estimated earnings growth rate of 36.8% for the current year. Shares of the company have gained 19.3% in the past six months.