Comparing ABB (ABB) & Babcock (BW)

Babcock (NYSE: BW) and ABB (NYSE:ABB) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Volatility and Risk

Babcock has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, ABB has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Profitability

This table compares Babcock and ABB’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Babcock -14.41% -35.95% -12.60%
ABB 6.87% 18.62% 6.55%

Institutional & Insider Ownership

92.9% of Babcock shares are held by institutional investors. Comparatively, 4.1% of ABB shares are held by institutional investors. 2.5% of Babcock shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Babcock and ABB, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Babcock 1 2 1 0 2.00
ABB 2 6 5 0 2.23

Babcock presently has a consensus price target of $11.57, suggesting a potential upside of 493.16%. ABB has a consensus price target of $23.00, suggesting a potential upside of 1.28%. Given Babcock’s higher probable upside, equities analysts clearly believe Babcock is more favorable than ABB.

Dividends

ABB pays an annual dividend of $0.73 per share and has a dividend yield of 3.2%. Babcock does not pay a dividend. ABB pays out 67.6% of its earnings in the form of a dividend. Babcock has raised its dividend for 5 consecutive years.

Earnings & Valuation

This table compares Babcock and ABB’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Babcock $1.53 billion 0.06 -$137.65 million ($4.52) -0.43
ABB $33.56 billion 1.44 $4.26 billion $1.08 21.03

ABB has higher revenue and earnings than Babcock. Babcock is trading at a lower price-to-earnings ratio than ABB, indicating that it is currently the more affordable of the two stocks.

Summary

ABB beats Babcock on 11 of the 16 factors compared between the two stocks.

About Babcock

Babcock & Wilcox Enterprises, Inc. is a technology-based provider of fossil and renewable power generation and environmental equipment that includes a suite of boiler products and environmental systems, and services for power and industrial uses. The Company operates in three segments: Power, Renewable and Industrial. Through its Power segment, the Company provides the supply of and aftermarket services for steam-generating, environmental, and auxiliary equipment for power generation and other industrial applications. The Renewable segment provides steam-generating systems, environmental and auxiliary equipment for the waste-to-energy and biomass power generation industries, and plant operations and maintenance services for its systems and equipment. The Industrial segment focuses on custom-engineered cooling, environmental, noise abatement and industrial equipment along with related aftermarket services.

About ABB

ABB Ltd (ABB) is a holding company. The Company’s segments include Electrification Products, Robotics and Motion, Industrial Automation, Power Grids, and Corporate and Other. It operates through four divisions: Electrification Products, Robotics and Motion, Industrial Automation and Power Grids. It is engaged in serving customers in utilities, industry and transport and infrastructure. The Electrification Products segment manufactures and sells products and services including low and medium-voltage switchgear, breakers, switches and control products. The Robotics and Motion segment manufactures and sells motors, generators, variable speed drives and robots and robotics. The Industrial Automation segment develops and sells control and plant optimization systems, and automation products and solutions. The Power Grids segment supplies power and automation products, systems, and service and software solutions.

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