There’s an old joke that says if you like sausage, you should never watch how it’s made. I feel that ABB (ABB)
has been a little like that – the company has spent most of the past
four years restructuring and repositioning the business (including
sizable M&A), and while the company is now on better footing, the
whole process has left a lot of investors feeling squeamish and put off
by the name.
I can’t promise that the new ABB will
be a significant improvement over the old one, but I do know that this
is a company with leadership in a wide range of end-markets that can
(and should) provide above-average growth in the coming years. I also
know that ABB is operationally leaner and more focused on businesses
that can provide steadier, higher-margin revenue for the long term. I
still expect relatively less from ABB than I do some of its closest
peers (including Rockwell (ROK)),
but mid-single-digit revenue growth and low double-digit FCF margins
can support a fair value a little higher than today’s price and high
single-digit total returns.
Read more here:
ABB Is Getting There, But The Process Has Been Ugly
No comments:
Post a Comment