Updating ABB LTD., Yum China Holdings INC. and Venator Materials PLC

Article Excerpt

ABB LTD. (ADR) $24 (New York symbol ABB; Manufacturing & Industry sector; ADRs outstanding: 2.1 billion; Market cap: $50.4 billion; Dividend yield: 3.4%; Takeover Target Rating: Low; www.abb.com) makes transformers, transmission systems and circuit breakers for electrical utilities. It also produces automation systems and robotics for industrial clients. Activist investor Cevian Capital—ABB’s second-largest shareholder—wants the company to spin off its power grids operations. That business accounts for just 30% of overall sales, still its operating margins are significantly lower than those for ABB’s other three segments. Despite activist pressure, ABB has decided to hang onto the power-grids business and has taken steps to boost shareholder value. The company is now seeing the benefits of its plan: Overall earnings in the first quarter of 2018 improved 10.7%, to $0.31 per ADR from $0.28 a year earlier; revenue rose 9.8%, to $8.6 billion from $7.9 billion; and, while operating margin at the power-grids business fell to 9.7% from 9.9% a year earlier, ABB expects the operating…