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ABB Ltd reported better-than-expected first-quarter 2023 results. Earnings beat estimates by 40% and revenues beat the same by 6.4%.
Adjusted earnings came in at 56 cents per share, beating the Zacks Consensus Estimate of 40 cents per share. Our estimate for first-quarter adjusted earnings was 41 cents per share. The bottom line increased 80.6% on a year-over-year basis.
Top-Line Details
ABB’s first-quarter revenues totaled $7,859 million, up 13% from the year-ago quarter’s figure. The upside can be attributed to higher revenues across most of its segments and robust price execution. On a comparable basis, revenues grew 22%. The top line beat the Zacks Consensus Estimate of $7,386 million. Our estimate for net sales in the reported quarter was $7,227.8 million.
In the reported quarter, total orders were $9,450 million, increasing 1% year over year. The metric rose 9% on a comparable basis, supported by strength across ABB’s businesses. While exiting the first quarter, its order backlog was $21,607 million, up 14% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,590 million, increasing 11% year over year supported by solid market demand and execution of the order backlog. Our estimate for segmental revenues was $3,463.5 million. Orders were up 1% year over year to $4,141 million.
Process Automation: Revenues were $1,436 million, decreasing 5% year over year due to portfolio changes caused by the spin-off of Accelleron. Our estimate for segmental revenues was $1,485.7 million. Orders increased 25% to $2,113 million.
Motion: Revenues amounted to $1,940 million, up 23% from the year-ago quarter’s number driven by the execution of the order backlog. Our estimate for segmental revenues was $1,582.1 million. Orders increased 3% to $2,113 million.
Robotics & Discrete Automation: Revenues were $937 million, increasing 28% year over year due to the execution of the order backlog driven by no material supply-chain constraints. Our estimate for segmental revenues was $779.6 million. Orders declined 23% to $1,001 million.
In the reported quarter, ABB’s total cost of sales was $5,143 million, increasing 9.8% from the year-ago quarter. The same represented 65.4% of the first-quarter revenues, compared with 81.5% in the year-ago period. The gross margin was 34.6%, up from 32.7% reported in the year-ago quarter.
Selling, general and administrative expenses decreased 8.1% to $1,339 million.
Operational (EBITA) in the quarter increased 28.1% to $1,277 million. Operational EBITA margin grew 200 basis points to 16.3%.
Balance Sheet and Cash Flow
Exiting first-quarter 2023, ABB had cash and cash equivalents of $3,438 million, compared with $4,156 million recorded in December 2022. Long-term debt was $5,230 million, higher than $ 5,143 million at the end of December 2022.
In the first three months of 2023, net cash inflow from operating activities totaled $282 million against $573 million cash outflow in the year-ago period.
In the same time period, ABB paid out dividends worth $1,294 million compared with $889 million in the year-ago period.
Outlook
For the second quarter of 2023, ABB anticipates double-digit comparable revenue growth.
For 2023, ABB expects comparable revenue growth of at least 10% compared with more than 5% growth predicted earlier. The company also expects to improve operational EBITA margin, year over year.
Zacks Rank & Stocks to Consider
ABB currently carries a Zacks Rank #3 (Hold). Some top-ranked companies from the Industrial Products sector are discussed below:
ALG’s earnings surprise in the last four quarters was 6.0%, on average. In the past 60 days, estimates for Alamo’s 2023 earnings have increased 7.5%. The stock has gained 16.1% in the past six months.
Ingersoll Rand Inc. (IR - Free Report) presently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 8.5%, on average.
In the past 60 days, estimates for Ingersoll Rand’s 2023 earnings have increased 3.3%. The stock has rallied 12% in the past six months.
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE’s earnings surprise in the last four quarters was 10.3%, on average.
In the past 60 days, Allegion’s earnings estimates have increased 1.1% for 2023. The stock has gained 4.8% in the past six months.
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ABB Q1 Earnings Surpass Estimates, Revenues Rise 13% Y/Y
ABB Ltd reported better-than-expected first-quarter 2023 results. Earnings beat estimates by 40% and revenues beat the same by 6.4%.
Adjusted earnings came in at 56 cents per share, beating the Zacks Consensus Estimate of 40 cents per share. Our estimate for first-quarter adjusted earnings was 41 cents per share. The bottom line increased 80.6% on a year-over-year basis.
Top-Line Details
ABB’s first-quarter revenues totaled $7,859 million, up 13% from the year-ago quarter’s figure. The upside can be attributed to higher revenues across most of its segments and robust price execution. On a comparable basis, revenues grew 22%. The top line beat the Zacks Consensus Estimate of $7,386 million. Our estimate for net sales in the reported quarter was $7,227.8 million.
In the reported quarter, total orders were $9,450 million, increasing 1% year over year. The metric rose 9% on a comparable basis, supported by strength across ABB’s businesses. While exiting the first quarter, its order backlog was $21,607 million, up 14% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,590 million, increasing 11% year over year supported by solid market demand and execution of the order backlog. Our estimate for segmental revenues was $3,463.5 million. Orders were up 1% year over year to $4,141 million.
Process Automation: Revenues were $1,436 million, decreasing 5% year over year due to portfolio changes caused by the spin-off of Accelleron. Our estimate for segmental revenues was $1,485.7 million. Orders increased 25% to $2,113 million.
Motion: Revenues amounted to $1,940 million, up 23% from the year-ago quarter’s number driven by the execution of the order backlog. Our estimate for segmental revenues was $1,582.1 million. Orders increased 3% to $2,113 million.
Robotics & Discrete Automation: Revenues were $937 million, increasing 28% year over year due to the execution of the order backlog driven by no material supply-chain constraints. Our estimate for segmental revenues was $779.6 million. Orders declined 23% to $1,001 million.
ABB Ltd Price, Consensus and EPS Surprise
ABB Ltd price-consensus-eps-surprise-chart | ABB Ltd Quote
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales was $5,143 million, increasing 9.8% from the year-ago quarter. The same represented 65.4% of the first-quarter revenues, compared with 81.5% in the year-ago period. The gross margin was 34.6%, up from 32.7% reported in the year-ago quarter.
Selling, general and administrative expenses decreased 8.1% to $1,339 million.
Operational (EBITA) in the quarter increased 28.1% to $1,277 million. Operational EBITA margin grew 200 basis points to 16.3%.
Balance Sheet and Cash Flow
Exiting first-quarter 2023, ABB had cash and cash equivalents of $3,438 million, compared with $4,156 million recorded in December 2022. Long-term debt was $5,230 million, higher than $ 5,143 million at the end of December 2022.
In the first three months of 2023, net cash inflow from operating activities totaled $282 million against $573 million cash outflow in the year-ago period.
In the same time period, ABB paid out dividends worth $1,294 million compared with $889 million in the year-ago period.
Outlook
For the second quarter of 2023, ABB anticipates double-digit comparable revenue growth.
For 2023, ABB expects comparable revenue growth of at least 10% compared with more than 5% growth predicted earlier. The company also expects to improve operational EBITA margin, year over year.
Zacks Rank & Stocks to Consider
ABB currently carries a Zacks Rank #3 (Hold). Some top-ranked companies from the Industrial Products sector are discussed below:
Alamo Group Inc. (ALG - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
ALG’s earnings surprise in the last four quarters was 6.0%, on average. In the past 60 days, estimates for Alamo’s 2023 earnings have increased 7.5%. The stock has gained 16.1% in the past six months.
Ingersoll Rand Inc. (IR - Free Report) presently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 8.5%, on average.
In the past 60 days, estimates for Ingersoll Rand’s 2023 earnings have increased 3.3%. The stock has rallied 12% in the past six months.
Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE’s earnings surprise in the last four quarters was 10.3%, on average.
In the past 60 days, Allegion’s earnings estimates have increased 1.1% for 2023. The stock has gained 4.8% in the past six months.