Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell) on May 1.
Why the Downgrade?
ABB witnessed sharp downward estimate revisions after
reporting disappointing first-quarter 2014 results. Shares of
this power and automation technology bellwether also declined
0.83% and given its expected lower earnings growth rates in the
upcoming quarters, it will witness a further downtrend.
On Apr 29, ABB reported first-quarter earnings per share of 24
cents, marking a decline of 17.2% from the prior-year figure of
29 cents. Quarterly earnings were also down 27.3% compared with
the Zacks Consensus Estimate of 33 cents.
The quarterly results included the effect of additional
charges from certain projects in the Power Systems (PS) division.
Revenues for the first quarter were also down 1% in local
currency due to a lower opening order backlog than the prior-year
period and execution issues in the Power Systems division.
Further, the company also witnessed a 12% decrease in large
orders (order value above $15 million), mainly in the Process
Automation and Power Products businesses due to continued delay
of customer capital investments in grid infrastructure and
greenfield industrial development projects. Service orders also
declined 6% in local currency due to ABB's exit from a large
full-service contract in Finland.
This apart, the Zacks Consensus Estimate for the second
quarter of 2014 decreased 10.5% to 34 cents per share over the
last 7 days. Although for fiscal 2014, the estimates remained
unchanged at $1.55 a share, for fiscal 2015, 3 out of 4 estimates
were revised downward over the last 7 days, dragging the Zacks
Consensus Estimate down by 2.3% to $1.73 per share.
Other Stocks to Consider
Not all machine and electrical stocks are performing as poorly
as ABB. Some better-ranked stocks are
Plug Power Inc.
AO Smith Corp.
), all carrying a Zacks Rank #2 (Buy).
ABB LTD-ADR (ABB): Free Stock Analysis Report
SMITH (AO) CORP (AOS): Free Stock Analysis
AVT INC (AVTC): Get Free Report
PLUG POWER INC (PLUG): Free Stock Analysis
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