Either they or their acquirer will be around next quarter (century)
From Reuters' AlphaNow:
They say you can’t spell geek without “EE,” the abbreviation for electrical engineering. One of the largest EE companies is ABB Ltd. (ABBN.VX) which trades on the Swiss stock exchange (and as an ADR on the NYSE). ABB takes in revenues of more than $40 billion, however, it looks like its earnings will not be charged up.
ABB is the world’s largest builder of electricity grids and is active in many sectors, with its core businesses being in power and automation technologies. Its services are diversified around the world, with Europe generating the largest part of its revenues at 34%. The company made some moves to cut costs and improve margins over the last couple of years, and gave investors more clarity on its core business (since ABB has so many divisions). However, CEO Ulrich Spiesshofer described the latest recovery in the business cycle as patchy. Based on StarMine’s negative Predicted Surprise of 4%, it looks like ABB is likely to report an earnings miss when it releases quarterly results on July 23.
Weak current
ABB has seen return on net operating assets (RNOA) fall for the last five years. RNOA is now at 21%, half its level three years ago. That steady decline shows that the company may not be using its assets very efficiently. The component responsible for the falling RNOA is net operating asset turnover — the amount of sales or revenues generated per dollar of assets. Operating asset turnover is an indicator of the efficiency with which ABB is using its assets to generate revenues.
As you can see in the chart below, that measure has been steadily falling and is now at 2.0. By this measure, ABB was outperforming the industry median just three years ago (3.2 vs. 2.6) but now trails the industry median. It also explains why management has been scrambling over the last few years to become more efficient, despite improved revenues.
Flickering lights
Analysts have been cutting quarterly estimates for ABB. The I/B/E/S consensus estimate for the second fiscal quarter is at 34 cents per share, down four cents from 90 days ago. The StarMine SmartEstimate is lower at 32 cents per share. Eight analysts have lowered their estimates in the last three months. Estimates for full-year earnings have also come down dramatically to $1.38 per share, down nearly 35 cents during the course of the year....MORE
