ABB Ltd (ABBN.SW) | Investment Case

1. Company Snapshot

1.a. Company Description

ABB Ltd engages in manufacture and sale of electrification, automation, robotics, and motion products for customers in utilities, industry and transport, and infrastructure in Switzerland and internationally.Its Electrification segment provides electric vehicle charging infrastructure, renewable power solutions, modular substation packages, distribution automation products, switchboard and panelboards, switchgear, UPS solutions, circuit breakers, measuring and sensing devices, control products, wiring accessories, enclosures and cabling systems, and intelligent home and building solutions.The company's Robotics & Discrete Automation segment offers industrial robots, software, robotic solutions and systems, field services, spare parts, and digital services.

This segment also offers solutions based on its programmable logic controllers, industrial PCs, servo motion, transport system, and machine vision.Its Motion segment manufactures and sells drives, motors, generators, traction converters, and mechanical power transmission products that are driving the low-carbon future for industries, cities, infrastructure, and transportation.The company's Process Automation segment provides process and discrete control technologies, advanced process control software and manufacturing execution systems, sensing, measurement and analytical instrumentation, marine propulsion systems, and large turbochargers.

In addition, this segment offers remote monitoring, preventive maintenance, asset performance management, emission monitoring, and cybersecurity services.It serves aluminum, automotive, buildings and infrastructure, cement, channel partners, chemical, data centers, food and beverage, process automation, life sciences, marine and ports, metals, mining, oil and gas, ports, power generation, printing, pulp and paper, railway, smart cities, water, and wind power industries.The company was founded in 1883 and is headquartered in Zurich, Switzerland.

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1.b. Last Insights on ABBN

ABB Ltd's recent performance was driven by strong Q2 earnings, which beat forecasts, and a record-high order intake of $9.79 billion, up 16% year-over-year. The company's industrial automation business saw significant growth, particularly in the US, where orders surged 37%. Additionally, ABB's Process Automation segment saw 23% order growth, driven by demand from the marine, ports, and energy industries. The company's Electrification segment also gained momentum, with record backlog and rising orders, fueled by data centers and key acquisitions.

1.c. Company Highlights

Last Price	58.68
Change Percentage	0.62%
Open	58.78
Previous Close	58.32
Market Cap ( Millions)	106919
Volume	2610560
Year High	61.06
Year Low	37.25
M A 50	57.74
M A 200	51.25

FCF Yield	3.11%
Dividend Yield	1.53%
ROE	31.17%
Debt / Equity	62.74%
Net Debt / EBIDTA	117.72%
Price To Book	8.89
Price Earnings Ratio	29.94
Price To FCF	32.2
Price To sales	3.86
EV / EBITDA	19.9

2. ABB's Q3 Results: Strong Performance and Strategic Divestiture

ABB's third-quarter results showed a robust financial performance, with revenues reaching an all-time high of $9.1 billion, representing a 9% increase year-over-year. The company's operational EBITA margin improved to 19.2%, driven by a 12% increase in operational EBITA. Earnings per share (EPS) came in at $0.526, slightly above analyst estimates of $0.523. Free cash flow also demonstrated significant improvement, rising by 32% to $1.6 billion. As Wierod noted, the data center business had more than double-digit growth in the quarter, underscoring the strong demand in this segment.

Publication Date: Oct -24

                                    📋 Highlights
                                    Revenue & Orders Surge::
                                                ABB achieved a 9% increase in orders and revenues to $9.1 billion each in Q3, marking an all-time high.
Robotics Divestiture::
                                                Sold the Robotics division to SoftBank for $5.4 billion, with closure expected by mid-2026.
Electrification Growth::
                                                Electrification revenue rose 13% to $4.5 billion, with earnings exceeding $1 billion and 10% order growth.
Free Cash Flow & Margin Expansion::
                                                Free cash flow surged 32% to $1.6 billion, while operational EBITA margin hit 19.2% (up 12%).
Data Center Electrification::
                                                Electrification content in data centers is projected to grow, with $300M+ in North American investments and a 10–20-year growth super cycle anticipated.

                                

Business Area Performance

The Electrification business area was a key driver of growth, with orders increasing by 10% and revenues rising by 13% to $4.5 billion. Earnings in this segment exceeded $1 billion, highlighting the strong profitability of the business. The growth was driven by increasing demand from data centers, utilities, and land transport infrastructure. ABB's Electrification business is well-positioned to capitalize on the growing trend of electrification across industries.

Strategic Divestiture and M&A

The company announced the sale of its Robotics division to SoftBank Group for an enterprise value of approximately $5.4 billion. This divestiture is expected to close in the second half of 2026 and will provide ABB with significant financial flexibility to invest in growth areas through organic investments and M&A. ABB has identified data centers, utility business, and automation as key areas for growth and plans to use the proceeds from the divestiture to increase dividends and share buybacks.

Valuation and Growth Prospects

With a P/E Ratio of 32.52 and an EV/EBITDA ratio of 21.25, ABB's valuation suggests that the market is pricing in significant growth prospects. Analysts estimate revenue growth of 5.5% for next year, which, combined with the company's strong track record of execution, supports the current valuation. The company's ROIC of 14.84% and ROE of 29.82% indicate a strong ability to generate returns on invested capital.

Outlook and Guidance

ABB has left its revenue guidance for 2025 unchanged but updated its full-year margin guidance to be broadly at the higher end of the 16% to 19% target range. The company expects continued growth in its Electrification business, driven by increasing demand from data centers and other segments. While the Q4 guidance suggests a slowdown in growth due to a high comp from the previous year, ABB remains optimistic about its long-term growth prospects.

3. NewsRoom

Nvidia Just Supercharged Fanuc--Is This Japan's AI Robot Moment?

Dec -02

Source:

ABB unveils advanced single-device analyzer for measuring four gas contaminants

Dec -02

Source:

ABB concludes purchase of Gamesa Electric’s power electronics unit

Dec -02

Source:

Aussie Broadband Limited's (ASX:ABB) Intrinsic Value Is Potentially 99% Above Its Share Price

Nov -29

Source:

Should You Reconsider ABB After Strategic Automation and Electrification Investments?

Nov -28

Source:

Data Center Low Voltage (LV) / Medium Voltage (MV) Power Distribution Business Report 2025: Market to Reach $3.3 Billion by 2030 ABB, Chatsworth, Cummins, CyberPower System, Delta Electronics Leading

Nov -27

Source:

ABB to modernise automation systems at solar power plants in Spain

Nov -27

Source:

ABB (SWX:ABBN): Is the Current Share Price Exceeding Fair Value?

Nov -27

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.40%)

6. Segments

Electrification

Expected Growth: 6.0%

The increasing demand for renewable energy, electric vehicles, and grid modernization drives growth in this segment. As governments implement policies to reduce carbon emissions, the demand for electrification solutions is expected to rise, justifying a growth rate above the global average.

Motion

Expected Growth: 5.0%

While the motion segment is essential for industrial operations, its growth is slightly constrained by mature markets and the slow adoption of new technologies in some regions. However, the ongoing need for energy efficiency and productivity improvements supports a steady growth rate.

Process Automation

Expected Growth: 4.5%

The growth in this segment is influenced by the capital expenditure cycles of process industries, which can be volatile. While there is a trend towards digitalization and automation, the growth rate is slightly below the global average due to the cyclical nature of the industries served.

Robotics & Discrete Automation

Expected Growth: 7.0%

The increasing demand for automation, driven by the need for flexibility, productivity, and labor efficiency, supports a high growth rate in this segment. Industries such as automotive and electronics are adopting robotics and automation at a rapid pace, justifying a growth rate above the global average.

Corporate Costs, Intersegment Eliminations and Other

Expected Growth: 0.0%

This segment does not directly contribute to revenue growth as it involves eliminations and costs. Therefore, it is not expected to grow in line with the operational segments.

7. Detailed Products

Electrification Products

ABB's Electrification Products segment offers a range of products and solutions for low-voltage and medium-voltage electrical installations, including circuit breakers, switches, and electrical distribution systems.

Industrial Automation

ABB's Industrial Automation segment provides automation and electrification solutions for process and discrete industries, including control systems, drives, and robotics.

Motion

ABB's Motion segment offers a range of products and solutions for motion control, including drives, motors, and generators.

Robotics and Discrete Automation

ABB's Robotics and Discrete Automation segment provides robotic solutions for welding, painting, and material handling, as well as machine automation solutions.

Power Grids

ABB's Power Grids segment offers a range of products and solutions for the transmission and distribution of electrical power, including high-voltage equipment and grid automation systems.

8. ABB Ltd's Porter Forces

Forces Ranking

Threat Of Substitutes

ABB Ltd has a diverse product portfolio, which reduces the threat of substitutes. However, the increasing adoption of renewable energy sources and energy storage systems poses a moderate threat to ABB's traditional business.

Bargaining Power Of Customers

ABB Ltd has a large and diversified customer base, which reduces the bargaining power of individual customers. Additionally, ABB's products and solutions are often customized, making it difficult for customers to switch to alternative suppliers.

Bargaining Power Of Suppliers

ABB Ltd has a large and diversified supplier base, which reduces the bargaining power of individual suppliers. However, the company's reliance on a few key suppliers for critical components increases the bargaining power of these suppliers.

Threat Of New Entrants

The capital-intensive nature of ABB Ltd's business, combined with the need for significant research and development investments, creates a barrier to entry for new entrants.

Intensity Of Rivalry

The industrial automation and electrification markets are highly competitive, with several established players competing for market share. ABB Ltd faces intense competition from companies such as Siemens, Schneider Electric, and Rockwell Automation.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.47%
Debt Cost	3.95%
Equity Weight	60.53%
Equity Cost	8.86%
WACC	6.92%
Leverage	65.20%

11. Quality Control: ABB Ltd passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Cembre

A-Score: 6.6/10

Value: 2.5

Growth: 6.4

Quality: 7.9

Yield: 6.2

Momentum: 9.0

Volatility: 7.3

1-Year Total Return ->

Vinci

A-Score: 6.6/10

Value: 6.3

Growth: 6.2

Quality: 4.6

Yield: 6.9

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

BAE Systems

A-Score: 5.7/10

Value: 2.4

Growth: 6.9

Quality: 4.8

Yield: 4.4

Momentum: 9.5

Volatility: 6.3

1-Year Total Return ->

Legrand

A-Score: 5.3/10

Value: 1.8

Growth: 5.4

Quality: 6.7

Yield: 2.5

Momentum: 8.0

Volatility: 7.7

1-Year Total Return ->

ABB

A-Score: 5.3/10

Value: 1.1

Growth: 5.4

Quality: 6.9

Yield: 3.8

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Saint-Gobain

A-Score: 5.2/10

Value: 4.8

Growth: 5.8

Quality: 4.3

Yield: 4.4

Momentum: 6.5

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

5.72%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.92%

ABB Ltd - CH0012221716

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ABBN

1.c. Company Highlights

Expensive

Less Volatile

Better Quality

Revenues Miss

Earnings Beats

Strong Momentum

Earnings Miss

Revenues Beats

Medium Volatility

2. ABB's Q3 Results: Strong Performance and Strategic Divestiture

Business Area Performance

Strategic Divestiture and M&A

Valuation and Growth Prospects

Outlook and Guidance

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.40%)

6. Segments

Electrification

Expected Growth: 6.0%

Motion

Expected Growth: 5.0%

Process Automation

Expected Growth: 4.5%

Robotics & Discrete Automation

Expected Growth: 7.0%

Corporate Costs, Intersegment Eliminations and Other

Expected Growth: 0.0%

7. Detailed Products

Electrification Products

Industrial Automation

Motion

Robotics and Discrete Automation

Power Grids

8. ABB Ltd's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: ABB Ltd passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

58.68$

Current Price

58.68$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA