ABB looks set to release value for shareholders.
The turnaround continues at ABB
Lee Samaha (ABB): The industrial giant has long been a puzzling investment proposition. On the one hand, it has an exciting collection of businesses with exposure to some highly attractive megatrends. Its electrification segment (including an electric vehicle charging stations, hardware, and services business) has exposure to the global trend toward electrification in the economy. ABB's robotics and discrete automation segment have exposure to the trend toward increasing automation in the factory, and process automation and motion control are indispensable parts of the industrial economy.
On the other hand, the company has flattered to deceive over the years. In the decade before the pandemic hit, the stock only rose a miserable 26%. However, since the start of 2020, it's outperformed many of its automation peers.
Data by YCharts
The reason comes down to the turnaround strategy put in place by CEO Bjorn Rosengren when he took over in March 2020. Underperforming businesses have been sold, for example, the stake in its power grids to Hitachi and a mechanical power business to RBC Bearings. Meanwhile, ABB will spin off its turbocharging business (Accelleron) in due course, and plans to spin-off its e-mobility business when market conditions are right.
Everything points to a business being restructured for growth in its core businesses while it catches up with its peers' margin performance. It's a compelling value proposition, and investors will currently earn a 3% dividend yield while they wait for it to happen.
