ABB (NYSE: ABB) and Babcock (NYSE:BW) are both industrial products companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.
Volatility & Risk
ABB has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Babcock has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.
Valuation & Earnings
This table compares ABB and Babcock’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| ABB | $33.56 billion | 1.44 | $4.26 billion | $1.08 | 21.03 |
| Babcock | $1.53 billion | 0.06 | -$137.65 million | ($4.52) | -0.43 |
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.
Analyst Recommendations
This is a summary of recent recommendations and price targets for ABB and Babcock, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| ABB | 2 | 6 | 5 | 0 | 2.23 |
| Babcock | 1 | 2 | 1 | 0 | 2.00 |
ABB presently has a consensus target price of $23.00, suggesting a potential upside of 1.28%. Babcock has a consensus target price of $11.57, suggesting a potential upside of 493.16%. Given Babcock’s higher possible upside, 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. ABB has raised its dividend for 5 consecutive years.
Insider and Institutional Ownership
4.1% of ABB shares are held by institutional investors. Comparatively, 92.9% of Babcock shares are held by institutional investors. 2.5% of Babcock shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Profitability
This table compares ABB and Babcock’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| ABB | 6.87% | 18.62% | 6.55% |
| Babcock | -14.41% | -35.95% | -12.60% |
Summary
ABB beats Babcock on 12 of the 16 factors compared between the two stocks.
ABB Company Profile
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.
Babcock Company Profile
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.
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