ABB Earnings: Underwhelming Order Growth Sends Shares Lower, Despite Record EBITA Margin

Wide-moat ABB delivered a record adjusted EBITA margin of 19.0% during the second quarter, comfortably beating the consensus estimate of 18.4%. The 150-basis-point improvement versus the prior year reflects a structurally higher profitability, achieved via decentralization and portfolio management performed during the last four years. The order intake for the quarter has underwhelmed the market, sending shares 7% lower, having recently reached an all-time-high share price. We maintain our CHF 40.50 fair value estimate and view shares as marginally overvalued.