You wouldn't necessarily know it by the share price reaction, but ABB (NYSE:ABB) had a surprisingly good quarter with underlying margin outperformance of nearly 300bp. It's certainly fair to wonder how much of that the company can retain as demand recovers, and orders were not impressive, but the solid profitability in Electrical Products (or EP) and Robotics & Discrete Automation (or RDA) is still a good starting point for the recovery.
I'm looking forward to ABB's November 19 Capital Markets Day, and particularly with respect to management commentary on further expense/margin initiatives, the software strategy, and potential non-strategic disposals. As far as valuation goes, I think the long-term return potential (in the low high-single-digits) is more acceptable than spectacular, but in an expensive sector, and with many still in the doubters camp where the long-term turnaround is concerned, I'm still relatively bullish on ABB shares.
Follow this link to the full article:
ABB Delivers Surprisingly Good Margins, But End-Market Weakness Still Significant
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