Insider Buying

Insider Buying Report: ABB Ltd (ABBN:SW)

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ABB Ltd
(ABBN:SW)
12 months:
+27%
Activity:
Bullish
Pattern:
Purchase from CEO
News:
Solid Q3 results
ABB Ltd
(ABBN:SW)
12 months:
+27%
Activity:
Bullish
Pattern:
Purchase from CEO
News:
Solid Q3 results

If a CEO is buying company shares, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts when it comes to revenue and earnings trends.

In this report, we are going to highlight a CEO purchase at ABB Ltd (ABBN:SW). ABB is a global technology business that operates in the areas of electrification, automation, motion, and robotics. The company, which has operations in over 100 countries, serves a range of industries including the transport, utilities, and infrastructure industries. It is listed on the SIX Swiss Exchange and currently has a market capitalization of CHF 62.4 billion.

ABB Ltd: Insider Buying

Our data shows that on October 22, CEO Bjoern Rosengren bought 5,000 ABBN shares at a price of CHF 30.25 per share. This purchase cost the insider CHF 151,250 and increased his holding to 10,000 shares.

The graph represents ABB Ltd' price history, with significant buy and sell events highlighted.

High-Conviction Purchase

Mr. Rosengren – who joined ABB as CEO in March 2020 – has extensive experience in the industrial sector. Previously, he was President and CEO of engineering company Sandvik between 2015 and 2020. Before this, he was President and CEO of the smart technology group Wärtsilä Oyj. This background means that he is likely to have a good understanding of his firm’s prospects.

What stands out about this trade from Mr. Rosengren is that it has doubled the size of his holding. The fact that the insider has boosted his position by 100% suggests that he’s confident the stock is set to move higher.

Strong Order Growth

ABB’s recent Q3 results were solid, given that the company was impacted negatively by supply chain constraints.

For the period, revenue was up 7% to $7.03 billion while orders were up 29% to $7.87 billion. Operational EBITA amounted to $1.06 billion, up 35% year on year, with EBITA margin rising to 15.1% from 12.0%, while cash flow from operating activities was up 171% to $1.10 billion.

“Q3 painted a mixed picture, containing on one hand a high level of demand driving strong order growth, while on the other hand the tight supply chain impacted our revenues more than anticipated. Still, we improved both the underlying operational earnings and margin, delivered strong cash flows, made progress with portfolio adjustments, as well as delivered some important product launches,” commented Mr. Rosengren.

Looking ahead, the group expects supply chain challenges to persist in the near term. Yet it still expects to deliver revenue growth of 6%-8% for the year. It also expects EBITA margin to rise to the upper half of the 13%-16% target range. The CEO noted that there’s ample room on the balance sheet to support both organic growth and acquisitions as well as reward shareholders.

In light of these solid results, we see the insider buying here as a bullish indicator.

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