ABB Has Rebuilt Belief In Its Execution, But Macro Is Getting More Challenging

I’ve been pretty straightforward in my praise of ABB’s (NYSE:ABB) management team since Bjorn Rosengren joined the company, and they continue to deliver results with significant transformation (selling, divesting, and restructuring businesses) and restructuring, with the company now posting the best margins in many years despite ongoing input/supply chain inflation.

Valuation did get a little ahead of itself, though, and coupled with growing concerns about short-cycle and automation demand in 2023, the shares have underperformed of late. Since my last update, the shares have lost close to 20% of their value, underperforming the broader industrial sector by about 15%, as well as frequent comparables like Eaton (ETN), Rockwell (ROK), Schneider (OTCPK:SBGSY), and Siemens (OTCPK:SIEGY).

I do have some concerns about the macro outlook for 2023-2024, but my concern is more on market sentiment toward ABB than any meaningful alternation in the long-term outlook for major drivers like electrification and automation. Still, with a prospective long-term annualized return back in the high single-digits, this is a name worth at least a spot on a watchlist.

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ABB Has Rebuilt Belief In Its Execution, But Macro Is Getting More Challenging