Can ABB's Motion Segment Sustain Growth Amid Softening Orders?

ABB Ltd’s ABBNY Motion segment continues to contribute steadily to its overall performance. In the first quarter of 2025, the segment reported revenues of $1.84 billion, up 3% year over year on a comparable basis. Solid backlog execution and strength in commercial building HVAC, power generation, and water & wastewater markets are augmenting its top-line performance. In the first quarter, the segment’s operational EBITA rose 5% year over year to $360 million. The operational EBITA margin also increased 110 basis points to 19.6% reflecting positive pricing and improved operational efficiency. The order backlog was $5.72 billion compared with $5.61 billion reported at the end of the year-ago quarter, with a book-to-bill ratio of 1.17.

However, in the same period, the segment’s total orders decreased 6% year over year to $2.16 billion. The decline in orders was mainly due to a tough comparison with the previous year, which included a one-time $150 million order in the traction division. Demand for products remained weak across end markets, including oil & gas, food & beverage, chemicals and rail. Also, global uncertainty related to trade policies could weigh on the segment’s near-term performance.

Despite this, backed by solid momentum in the service business and a strong backlog level, the Motion segment is well-positioned to play a key role in ABB’s growth in the coming quarters.

Segment Snapshot of ABB's Peers

Among its major peers, Eaton Corporation plc’s ETN eMobility segment reported net sales of $162 million in the first quarter of 2025, up 2% year over year. Eaton generated 2.5% of its total sales from this segment in the quarter. However, Eaton’s segment reported an operating loss of $4 million due to launch costs incurred related to new programs.

EnerSys’ ENS Motive Power segment generated net sales of $392 million in fourth-quarter fiscal 2025, down 0.6% year over year. However, EnerSys’ segment’s volume growth was flat in the quarter and price/mix had a positive impact of 1% on sales.  EnerSys derived 40.2% of its total revenues from this segment during the quarter.

ABBNY’s Price Performance, Valuation and Estimates

Shares of ABB have gained 8.5% in the past six months compared with the industry’s growth of 3.5%.

From a valuation standpoint, ABBNY is trading at a forward price-to-earnings ratio of 23.17X, above the industry’s average of 23.12X. ABB carries a Value Score of C.

The Zacks Consensus Estimate for ABB’s second-quarter 2025 earnings has declined over the past 60 days.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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