ABB Stock Trades Near 52-Week High: Should You Buy Now or Wait?

Shares of ABB Ltd ABBNY have been showing impressive gains of late, trading close to its 52-week high of $60.32. The stock closed at $58.94 yesterday, 2.3% below the highest point. Shares of the electrification, motion and automation solutions provider have gained 9.8% in the past six months, outpacing the industry’s and the S&P 500’s growth of 6% and 6.2%, respectively.

The company’s peers, including Emerson Electric Co. EMR and Franklin Electric Co. FELE have gained 17.6% and lost 1.5%, respectively, over the said time frame.

ABBNY Outperforms Industry & S&P 500

The stock is trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.

ABBNY Shares Trading Above 50-Day and 200-Day SMA

Factors Favoring the Company

ABB’s Process Automation segment plays an important role in its overall growth. Strength in the marine, ports and energy industries is supporting the segment’s performance. Strong project activity in several areas, like passenger vessels, port electrification and industrial automation, has been proving beneficial. Customers continue to invest in advanced automation platforms to improve efficiency and operational control, which bodes well for the segment.

It is also benefiting from follow-on orders and growing customer interest in smart and connected solutions. In the first quarter of 2025, orders from the segment increased 23% and revenues rose 5% on a year-over-year basis.

Exiting the first quarter, the segment’s order backlog totaled $8.1 billion, higher than $7.4 billion reported at the end of the previous quarter. This strong backlog level reflects ABBNY’s steady execution on large projects and growing traction in digital automation platforms. The increasing adoption of automation technologies and a digital automation platform is also driving the company’s recurring revenues and strengthening long-term customer relationships.

ABB is also witnessing solid momentum in the Electrification segment, driven by solid customer activities in most of the markets, including utilities and buildings. Positive momentum in the data center segment has been driving orders across the company’s Americas and Asia, Middle East and Africa (AMEA) markets. In the first quarter, the segment’s orders and revenues rose 2% and 6%, respectively, year over year.

Strength in commercial building HVAC, power generation, water and wastewater markets, along with ABBNY’s solid execution of the order backlog, has been augmenting its Motion segment’s results. In the first quarter, the segment’s revenues rose 3% year over year. Also, the company’s focus on operational executions, supply-chain optimization and marketing activities is likely to boost its performance.

Better-Than-Industry Returns

ABB’s Return on Equity (ROE) is 28.55%, much higher than the industry’s 16.95%, reflecting the company’s efficient usage of shareholders’ funds. In comparison, ROE for Emerson Electric and Franklin Electric is pegged at 13.22% and 14.08%, respectively.

ABB’s Earnings Estimate Revision

The company’s earnings estimates for 2025 have increased 1.2% to $2.45 per share over the past 60 days. The figure indicates year-over-year growth of 15%. Earnings estimates for 2026 have also increased 1.5% to $2.72 per share. The figure indicates year-over-year growth of 11.1%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Few Near-Term Concerns

Weakness in the machine automation market has remained a major concern for its Robotics & Discrete Automation segment. Demand remains muted in the chemicals, pulp & paper, and mining industries. Global uncertainty, particularly related to trade policies and slower investment decisions, may also affect the pace of large capital projects, which might affect the company’s performance.

High debt levels raise financial obligations and hurt the company’s profitability. It exited first-quarter 2025 with long-term debt of $7.02 billion, higher than $6.65 billion reported at the end of 2024. Also, the company’s short-term debt and current maturities of long-term debt surged 175% over the same period.

Stretched Valuation

ABBNY’s lofty valuation remains a concern. The stock is trading at a forward 12-month price-to-earnings (P/E) ratio of 23.16X, slightly higher than the industry average of 23.02X. This elevated valuation could make the stock vulnerable to further pullbacks if market sentiment sours. In comparison with ABBNY’s valuation, Emerson Electric and Franklin Electric are trading cheaper at 21.88X and 21.03X, respectively.

Final Take

Solid momentum across the Process Automation and Electrification segments, along with its strong backlog execution capabilities, positions ABBNY favorably for impressive growth in the long run. However, a few challenges, such as its high debt level and premium valuation compared to the broader market, are limiting this Zacks Rank #3 (Hold) company’s near-term prospects.

While current shareholders should hold their positions, new investors should wait for the stock to retract some of its recent gains and provide a better entry point.

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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