ABB shares: Price analysis before buying or selling

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Yes

ISIN code: CH0012221716

Ticker: SWX: ABBN

Index or market: SMI

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Elements to consider before selling or buying ABB shares

Analysis N°1

First, you'll need to keep an eye on public investments and government decisions regarding infrastructure that may have an effect on the aggregate demand of the electricity industry.

Analysis N°2

The ABB group's growth strategy, boosted by significant cash flow, is largely based on strategic acquisitions that must also be taken into account.

Analysis N°3

You should also keep an eye on the increase in demand for smart grids, which, at the same time increases the demand from the companies that produce them, that provide or build network infrastructure of this type.

Analysis N°4

Environmental regulations may also allow an increase in ABB's activities which could benefit from the demand of companies in the environmental services sector.

Analysis N°5

Global economic health is also an influencing factor in ABB's business. A lasting recession could weaken the group's cash flow and its long-term growth.

Analysis N°6

Finally, the cost reduction policy pursued by certain governments could also have a negative impact on ABB's shares because it would lead to a drop in replacement sales and slow down overall sales.

Analysis before buying or selling ABB shares

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General presentation of ABB

Check out a complete presentation of the ABB Company which will allow you to deepen your basic knowledge about this stock as well as better understand the evolution prospects of this share on the stock market.

The ABB group is a Swiss company specializing in the industrial capital goods sector. More precisely, it's one of the leaders of this sector worldwide carrying out the design, the manufacture and the sale of this equipment.

To better understand ABB's activities, it is possible to divide them into several divisions according to the percentage of turnover they generate like this:

Automation systems with electrical protection systems for measuring and controlling fluids, production process control systems for oil and gas, chemical, pharmaceutical, marine, and mining industries paper mills represent nearly 55.9% of the group's turnover, in addition to robots and modular systems.
Power transmission and distribution products and systems account for the remaining 44.1% of this company's revenue with transformers, medium voltage power distribution products such as circuit breakers, switches, fuses, sensors and products for high voltage electrical distribution such as capacitors and switches as well as automatic systems for power stations. ABB also offers turnkey installation services for transmission systems.

From a geographical distribution point of view of the ABB group's activities, note that it achieves 36.1% of its turnover in Europe, 32% in the Americas and 31.9% in Asia Middle East Africa.

Photo credits: ©9parusnikov/123RF.COM

The major competitors of ABB

Let's explore the economic environment of the ABB group with its main competitors in the market presented in detail here:

Siemens

This German company specializes in the energy, health, industrial and construction sectors and also offers a number of products and services similar to those offered by ABB. It is the first engineering company in Europe.

Schneider Electric

This French industrial group specializes in electricity management products, automation and solutions adapted to these businesses. It is of course one of the leaders in this sector of international activity.

Eaton Corporation

This American Company is also specialized in electrical systems as well as hydraulic systems. The group's head office was recently moved from Cleveland to Dublin and Eaton Corporation is a member of the European Association of Automotive Equipment Manufacturers.

Emerson

Finally, the Emerson group is another multinational in this sector based in the United States. This company offers a wide range of engineering services to manufacturers and sales reps, particularly in the electrical segment, and is present in over 150 different countries.

The major partners of ABB

Although the ABB group has some major competitors, seen above, it also has some allies that listed below along with some examples of strategic partnerships recently set up by the group:

Dassault Systèmes

The ABB Group announced a partnership with Dassault Systèmes in 2019 aimed at offering digital industry customers a unique portfolio of software solutions, from product lifecycle management to asset health monitoring. The two companies offer their customers an end-to-end service with open and advanced digital solutions aimed at improving their competitiveness and the life cycle of their products while improving flexibility, speed and manufacturing and operating productivity.

WWA

Earlier, ABB's subsidiary ABB Robotics also entered into a partnership with WWA, a company specializing in unique manufacturing processes. This partnership, which took effect in 2020, is the result of a long-standing partnership between the two companies. Through this new agreement, the two companies will intensify their cooperation. Remember that WWA produces innovative applications and solutions that are based on the ABB Robotics product range and that use the group's RobotStudio in order to program and perform simulations, particularly using virtual reality technology.

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The factors in favour of a rise in the ABB share price:

It is essential to understand how ABB will develop in the coming years before you start investing in the stock. To do this, you need to know the strengths and weaknesses of this company and therefore the advantages and disadvantages of this stock, which we have summarised for you.

As far as the advantages of this stock and the strengths of ABB are concerned, the following elements should be noted:

First of all, the group has a large customer base with which it has signed many long-term contracts, which guarantees regular income.
The same is true for the company's strong brand, which is very popular in the market and has helped it to cross-sell as well as provide it with many opportunities to sell on the secondary market.
Another of the company's strengths is that the ABB Group currently has many resources around the world and its international expansion strategy has paid off with a good geographic spread.
In particular, ABB has successfully established itself in emerging markets where the demand for infrastructure is growing. It is in these markets that it generates the majority of its revenues.
The ABB Group's strong brand image stems in part from its popularity for high quality products around the world, which gives it strong publicity.
The group and its value could, in the medium to long term, benefit from government initiatives in the area of infrastructure to sign new contracts, particularly in the electricity industry.
The ABB Group's financial position is another of its strengths, with strong cash flows that will enable it to make acquisitions, buybacks and pay dividends.
Finally, it is also worth noting that demand for smart grids continues to grow from the companies that manufacture them as well as from those that supply or build smart grid infrastructure. Demand from companies in the international services sector can also be stimulated by additional regulation in this area.

The factors in favour of a drop in the ABB share price:

Of course, you also need to be aware of ABB's weaknesses:

First of all, the acquisitions made by the ABB group have cost it a lot of money and according to some analysts has a habit of overpaying for company takeovers and not generating synergies on previously made transactions.
From a financial point of view, there is also a weak margin which is not improving in the short term due to the lack of liquidity.
The same applies to bad debts and the various financial difficulties with the group's customers, which have led to an increase in the debtor's provisions and have affected its profit.
The ABB Group may also experience a poor global economic outlook in the future, which would have a direct impact on its cash flows and on the growth of the economy.
Finally, it should also be noted that governments are currently under strong pressure to reduce costs in the face of the economic crisis. This pressure could therefore have a slowing effect on replacement sales and also represent a certain major danger for the ABB Group's overall sales in the more or less long term.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

Who are the most important shareholders of the ABB group today?

The capital of the ABB group is largely floating capital which can therefore be traded on the financial markets. However, part of its capital is also held by major shareholders. The shareholders are two in number since the Investor AB group holds 11.8% of the shares of this company and Cevian Capital II GP Limited holds nearly 5.92% for its part.

Which markets is the ABB share price quoted on?

ABB's share price has been listed on the Zurich and Stockholm stock exchanges since 1999. It also started to be listed on the American NYSE market in 2001. The company is currently the fifth largest company in the Swiss Market Index, that is to say the Swiss stock market index SMI and it's also one of the 30 companies whose shares are the most traded in the Stockholm Stock Exchange or OMX Stockholm 30.

How to carry out a technical analysis of the ABB share?

In order to perform a technical analysis of ABB stock, you should use trend and volatility indicators, among other things. Moving averages, pivot points as well as the levels of support and technical resistance are among the graphic elements that are the easiest to use and interpret, which are often the starting point for trends marked by this value.

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Analysis before buying or selling ABB shares