ABB LTD-REG (1ABB.MI) Stock Fundamental Analysis
Europe - Euronext Milan - BIT:1ABB - CH0012221716 - Common Stock
66.72 EUR
+1.76 (+2.71%)
We assign a fundamental rating of 7 out of 10 to 1ABB. 1ABB was compared to 75 industry peers in the Electrical Equipment industry. 1ABB has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. 1ABB has a decent growth rate and is not valued too expensively. These ratings would make 1ABB suitable for quality investing!
1. Profitability
1.1 Basic Checks
- 1ABB had positive earnings in the past year.
- In the past year 1ABB had a positive cash flow from operations.
- Each year in the past 5 years 1ABB has been profitable.
- 1ABB had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- 1ABB has a Return On Assets of 10.19%. This is amongst the best in the industry. 1ABB outperforms 93.33% of its industry peers.
- 1ABB's Return On Equity of 29.70% is amongst the best of the industry. 1ABB outperforms 96.00% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 17.17%, 1ABB belongs to the top of the industry, outperforming 94.67% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for 1ABB is significantly above the industry average of 9.57%.
- The 3 year average ROIC (14.75%) for 1ABB is below the current ROIC(17.17%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.19% | ||
| ROE | 29.7% | ||
| ROIC | 17.17% |
ROA(3y)8.41%
ROA(5y)9.81%
ROE(3y)24.82%
ROE(5y)27.29%
ROIC(3y)14.75%
ROIC(5y)12.48%
1.3 Margins
- Looking at the Profit Margin, with a value of 12.89%, 1ABB belongs to the top of the industry, outperforming 89.33% of the companies in the same industry.
- In the last couple of years the Profit Margin of 1ABB has grown nicely.
- 1ABB's Operating Margin of 17.63% is amongst the best of the industry. 1ABB outperforms 85.33% of its industry peers.
- In the last couple of years the Operating Margin of 1ABB has grown nicely.
- 1ABB has a better Gross Margin (39.63%) than 62.67% of its industry peers.
- 1ABB's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 17.63% | ||
| PM (TTM) | 12.89% | ||
| GM | 39.63% |
OM growth 3Y8.23%
OM growth 5Y17.64%
PM growth 3Y-8.63%
PM growth 5Y18.42%
GM growth 3Y4.39%
GM growth 5Y3.2%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), 1ABB is creating value.
- The number of shares outstanding for 1ABB remains at a similar level compared to 1 year ago.
- The number of shares outstanding for 1ABB has been reduced compared to 5 years ago.
- The debt/assets ratio for 1ABB has been reduced compared to a year ago.
2.2 Solvency
- 1ABB has an Altman-Z score of 5.16. This indicates that 1ABB is financially healthy and has little risk of bankruptcy at the moment.
- 1ABB has a Altman-Z score of 5.16. This is amongst the best in the industry. 1ABB outperforms 84.00% of its industry peers.
- 1ABB has a debt to FCF ratio of 2.08. This is a good value and a sign of high solvency as 1ABB would need 2.08 years to pay back of all of its debts.
- The Debt to FCF ratio of 1ABB (2.08) is better than 82.67% of its industry peers.
- A Debt/Equity ratio of 0.53 indicates that 1ABB is somewhat dependend on debt financing.
- 1ABB has a Debt to Equity ratio of 0.53. This is comparable to the rest of the industry: 1ABB outperforms 50.67% of its industry peers.
- Although 1ABB does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 2.08 | ||
| Altman-Z | 5.16 |
ROIC/WACC2.91
WACC5.91%
2.3 Liquidity
- A Current Ratio of 1.40 indicates that 1ABB should not have too much problems paying its short term obligations.
- Looking at the Current ratio, with a value of 1.40, 1ABB is in line with its industry, outperforming 49.33% of the companies in the same industry.
- A Quick Ratio of 1.00 indicates that 1ABB may have some problems paying its short term obligations.
- 1ABB's Quick ratio of 1.00 is in line compared to the rest of the industry. 1ABB outperforms 60.00% of its industry peers.
- 1ABB does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.4 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
- 1ABB shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.68%, which is quite good.
- The Earnings Per Share has been growing by 11.16% on average over the past years. This is quite good.
- The Revenue has been growing slightly by 6.16% in the past year.
- 1ABB shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.26% yearly.
EPS 1Y (TTM)15.68%
EPS 3Y13.8%
EPS 5Y11.16%
EPS Q2Q%29.41%
Revenue 1Y (TTM)6.16%
Revenue growth 3Y4.31%
Revenue growth 5Y3.26%
Sales Q2Q%11.43%
3.2 Future
- The Earnings Per Share is expected to grow by 10.52% on average over the next years. This is quite good.
- The Revenue is expected to grow by 6.10% on average over the next years.
EPS Next Y21.21%
EPS Next 2Y22.38%
EPS Next 3Y14.29%
EPS Next 5Y10.52%
Revenue Next Year6.08%
Revenue Next 2Y5.57%
Revenue Next 3Y5.67%
Revenue Next 5Y6.1%
3.3 Evolution
- The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 32.39, the valuation of 1ABB can be described as expensive.
- Based on the Price/Earnings ratio, 1ABB is valued a bit cheaper than 65.33% of the companies in the same industry.
- The average S&P500 Price/Earnings ratio is at 27.21. 1ABB is around the same levels.
- The Price/Forward Earnings ratio is 24.65, which indicates a rather expensive current valuation of 1ABB.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of 1ABB is on the same level as its industry peers.
- 1ABB is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.39 | ||
| Fwd PE | 24.65 |
4.2 Price Multiples
- 1ABB's Enterprise Value to EBITDA is on the same level as the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as 1ABB.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.49 | ||
| EV/EBITDA | 21.14 |
4.3 Compensation for Growth
- 1ABB's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- 1ABB has an outstanding profitability rating, which may justify a higher PE ratio.
- 1ABB's earnings are expected to grow with 14.29% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.53
PEG (5Y)2.9
EPS Next 2Y22.38%
EPS Next 3Y14.29%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.51%, 1ABB has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 0.79, 1ABB pays a better dividend. On top of this 1ABB pays more dividend than 85.33% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.81, 1ABB has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.51% |
5.2 History
- The dividend of 1ABB has a limited annual growth rate of 4.13%.
Dividend Growth(5Y)4.13%
Div Incr YearsN/A
Div Non Decr YearsN/A
5.3 Sustainability
- 1ABB pays out 42.87% of its income as dividend. This is a bit on the high side, but may be sustainable.
- 1ABB's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP42.87%
EPS Next 2Y22.38%
EPS Next 3Y14.29%
ABB LTD-REG / 1ABB.MI FAQ
What is the fundamental rating for 1ABB stock?
ChartMill assigns a fundamental rating of 7 / 10 to 1ABB.MI.
What is the valuation status of ABB LTD-REG (1ABB.MI) stock?
ChartMill assigns a valuation rating of 4 / 10 to ABB LTD-REG (1ABB.MI). This can be considered as Fairly Valued.
What is the profitability of 1ABB stock?
ABB LTD-REG (1ABB.MI) has a profitability rating of 9 / 10.
What is the valuation of ABB LTD-REG based on its PE and PB ratios?
The Price/Earnings (PE) ratio for ABB LTD-REG (1ABB.MI) is 32.39 and the Price/Book (PB) ratio is 9.73.
Can you provide the dividend sustainability for 1ABB stock?
The dividend rating of ABB LTD-REG (1ABB.MI) is 6 / 10 and the dividend payout ratio is 42.87%.