ABB Ltd Just Beat EPS By 16%: Here's What Analysts Think Will Happen Next
The annual results for ABB Ltd (VTX:ABBN) were released last week, making it a good time to revisit its performance. It looks like a credible result overall - although revenues of US$29b were in line with what the analysts predicted, ABB surprised by delivering a statutory profit of US$1.30 per share, a notable 16% above expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for ABB
After the latest results, the 21 analysts covering ABB are now predicting revenues of US$30.9b in 2023. If met, this would reflect a reasonable 4.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to expand 18% to US$1.59. Before this earnings report, the analysts had been forecasting revenues of US$29.7b and earnings per share (EPS) of US$1.55 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of CHF31.73, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ABB at CHF40.52 per share, while the most bearish prices it at CHF25.33. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ABB's past performance and to peers in the same industry. The analysts are definitely expecting ABB's growth to accelerate, with the forecast 4.8% annualised growth to the end of 2023 ranking favourably alongside historical growth of 3.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.7% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, ABB is expected to grow slower than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards ABB following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at CHF31.73, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for ABB going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - ABB has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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