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ABB to Commence Share Repurchase Program of Up to $4.3B

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ABB Ltd ABB recently announced that it will introduce its previously declared share repurchase program on Apr 9, 2021. The company’s share price inched up 0.2% yesterday to eventually close the trading session at $31.21.

Inside the Headlines

This new share repurchase program, which is expected to remain operational till Mar 23, 2022, will be for an aggregate amount of up to $4.3 billion. Under the program, ABB will be entitled to repurchase a maximum of 1,543,644 shares on any particular trading day. Notably, under this new buyback program, the shares will be traded on a second line on the SIX Swiss Exchange.

It’s worth mentioning that last month the company completed its initial share repurchase program, which was introduced in July 2020. Under it, ABB repurchased 128,620,589 shares for a total value of roughly $3.5 billion. However, at the company’s 2021 Annual General Meeting, its shareholders provided approval for cancelling 115 million shares bought under the initial share repurchase program.

Both of the company’s repurchase programs are in line with its policy of rewarding shareholders with cash proceeds of $7.8 billion from the sale of its Power Grids business (sold in July 2020).

Notably, the company’s sound capital-deployment strategies enable it to boost shareholders’ value. It focuses on acquiring lucrative businesses, repurchasing shares apart from providing dividends to shareholders. In April 2020, ABB paid out dividends worth $1,758 million to shareholders.

Zacks Rank, Price Performance and Estimate Trend

ABB, with a $62.7-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company stands to benefit from its strong market presence, organic growth investments and diligent cost-cutting initiatives over time. However, persistent weakness across automotive and conventional power generation end markets are concerning.

In the past six months, the stock has rallied 16.2% compared with the industry’s growth of 28.1%.

In the past 60 days, the Zacks Consensus Estimate for its earnings has been raised 1.6% to $1.24 for 2021, and the same for 2022 has increased 2.1% to $1.49.

Key Picks

Some better-ranked stocks from the Zacks Industrial Products sector are AGCO Corporation AGCO, II-VI Incorporated IIVI and Regal Beloit Corporation RBC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AGCO delivered a trailing four-quarter earnings surprise of 454.97%, on average.

II-VI pulled off a trailing four-quarter earnings surprise of 83.68%, on average.

Regal Beloit delivered a trailing four-quarter earnings surprise of 31.56%, on average.

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